UBS View on Current US Stock Market

Markets have remained impressively resilient, reaching new highs despite ongoing uncertainty and shifting headlines. While risks around trade policy, Fed independence, and fiscal deficits are mounting, equities remain supported by strong performance in mega-cap tech and optimism around AI. As we look to second-quarter earnings, we expect growth to moderate but remain positive, with the Magnificent Seven still leading the way, though at a slower pace.
 
We maintain a Neutral view on US equities, as we believe much of the good news is already priced in, and we anticipate some near-term volatility. However, we still see room for further gains, with the S&P 500 likely to reach 6,500 over the next year. In fixed income, we continue to favor high-quality assets, particularly investment grade credit and agency MBS, as yields are expected to trend lower, albeit with some bumps along the way.