UBS Forecast for S&P 500 in 2025

UBS strategists anticipate the S&P 500 index will close 2025 around 6,400, representing a roughly 9% increase from current levels, with returns expected to be “backloaded.”

According to a note from the bank, after a rally driven by Trump’s cabinet appointments, they foresee mild downside in equities during the first half of next year due to a slowdown in US growth.

Expectations are that once earnings estimates are more accurately adjusted, the second half of 2025 will provide a more favorable setting for equity markets.

UBS’s analysis suggests that while US stocks may underperform for a few months, they will outperform European equities over the next year. European stocks are projected to do better than those in emerging markets (EMs).

From a style perspective, UBS believes that Quality stocks will continue to shine over Value stocks, with US stocks showing robust performance.

In the EM sector, Chinese internet companies are highlighted as top picks, although UBS advises caution regarding gains in trades tied to China beneficiaries in other sectors.

On a macro level, strategists have observed indicators of global economic improvement—such as diminishing inflation, lower interest rate pressures, and increased real incomes at their fastest growth in two decades, alongside early signs of a housing market recovery. However, a growth slowdown is anticipated.

Specifically, UBS forecasts global growth to decline from 3.2% to 2.6% in the next two years, largely due to diminishing US economic momentum and the expected effects of US tariffs on an already fragile Chinese economy.