Banking giant explains why S&P 500 is set for more gains

Core Viewpoint - UBS expects the S&P 500 to continue its rally, driven by strong earnings and positive macroeconomic factors [1][2]. Group 1: Earnings Outlook - S&P 500 earnings per share are projected to rise by about 10% in the third quarter, supporting the view of an ongoing bull market [1]. - The upcoming earnings season is anticipated to reinforce the bullish sentiment in the market [1]. Group 2: Economic Fundamentals - Solid corporate fundamentals and resilient consumer spending are highlighted as key factors for the optimistic outlook [2]. - The labor market, while cooling, still shows positive job growth, limited layoffs, and rising wages, which support household demand and corporate profits [3]. Group 3: Investment Trends - Continued strength in artificial intelligence investment is noted, with corporate spending on AI infrastructure remaining robust [3][4]. - Revenue growth among cloud service providers is expected to stay strong, and earnings estimates for AI-focused firms may be revised higher [4]. Group 4: Monetary Policy Impact - UBS anticipates that Federal Reserve rate cuts, along with durable earnings growth, will sustain favorable market conditions and bolster investor confidence [4]. Group 5: Market Performance - The S&P 500 index is trading near record highs, currently at 6,677, reflecting a 0.5% increase for the day and a 13% rise year-to-date [5]. - Analysts project the index could potentially reach the 7,000 level by 2026, indicating a broadly bullish sentiment on Wall Street [7].