UBS strategist: S&P 500 index expected to reach 7500 points by 2026, benefiting from strong earnings growth.

UBS Group strategists forecast that the S&P 500 index will reach 7500 points next year as profit growth strengthens, representing an 11% increase from current levels. Bhanu Baweja and his team expect that even though profit expectations and valuations are at forty-year highs, growth will expand and strengthen from the second quarter onwards. The strategist predicts that this uptrend will expand to lower-quality cyclical stocks starting from the end of the first quarter. They believe that the rise in the S&P 500 index will be mainly driven by approximately 14% profit growth, with nearly half coming from technology companies, while valuations are expected to have a slightly negative impact. European and emerging market stocks are expected to provide a return of about 8%, slightly lower than U.S. stocks.