UBS lifts its target on the S&P 500 index to 5,000 by the end of 2022

After an about 100% gain since the pandemic low of 2,305 in March 2020, many would think that the benchmark S&P 500 index running out of steam is no longer a matter of “if” but of “when”. On the contrary, however, UBS Global Wealth Management says it sees no end to the rally anytime soon.  

SPX is up 20% year-to-date on strong Q2 reports

On Tuesday, the Swiss multinational investment bank raised its end of 2022 target on SPX to 5,000 that represents another 12% growth from here. UBS expects the benchmark index to close the current year at 4,600.

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“The rally off the COVID-19 bottom has been extraordinary, but we think there are further gains ahead. Solid economic and corporate profit growth, in conjunction with a still accommodative Fed, means the environment for stocks remains favourable,” said equity strategist David Lefkowitz in a note this morning.  

The easing COVID-19 restrictions in recent months saw the majority of SPX listed companies report market-beating results for Q2 and a promising outlook for the future. Consequently, the index is now up more than 20% on a year-to-date basis.

The impact of the Delta variant will be short-lived

According to Lefkowitz, Delta variant cases are likely to peak in the United States by the end of August, in line with the pattern seen in the European Countries where Delta broke earlier. Its impact, especially on entertainment and travel stocks, therefore, is expected to be short-lived.


The bullish note also came with a revised EPS guidance for SPX companies. UBS now forecasts a 45% growth in earnings this year, followed by another 10% increase in 2022, including an up to 5% drag on profit from higher corporate taxes next year.

The announcement comes a day after James Investment Research’s Barry James recommended caution as he saw a few factors that could weigh on the market.

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