UBS Predicts 13% Stock Market Surge by 2025 Amid ‘No Landing’ Economic Scenario
Investment banking giant UBS has released a bullish forecast for the stock market, projecting a significant rise in equities by 2025. The bank’s strategists predict the S&P 500 will reach 6,600 by the end of 2025, representing a 13% increase from current levels.
This optimistic outlook is underpinned by UBS’s support for a “no landing” scenario for the US economy, which suggests continued growth without a recession. The forecast is bolstered by several positive economic indicators, including a resilient job market that added 254,000 jobs in September, surpassing expectations. The unemployment rate remains near historic lows at 4.1%, while retail sales and GDP growth indicate robust economic activity.
Inflation, a key factor in the forecast, is nearing the Federal Reserve’s 2% target. Consumer prices grew 2.4% annually in September, supporting the potential for further interest rate cuts by the Fed. Markets currently anticipate a 72% chance of a 50 basis point rate cut by year-end, which is expected to be bullish for stocks.
UBS strategists believe that cooling inflation will allow the Federal Reserve to reduce interest rates, providing a boost to stock markets. Lower interest rates typically make stocks more attractive to investors seeking higher returns.
However, the upcoming US presidential election may introduce some market volatility. Despite this potential turbulence, UBS expects positive market fundamentals to persist. The election will occur amid Fed rate cuts, continued economic momentum, and emerging trends such as artificial intelligence, which could further drive market growth.
While UBS’s outlook is decidedly optimistic, it’s worth noting that other forecasters have differing views. The New York Fed, for instance, sees a 57% chance of a downturn by September 2025. Nevertheless, the strong US economy has led many analysts to support the “no landing” scenario predicted by UBS.
As investors navigate these forecasts, they should remain aware of potential market fluctuations and consider diversifying their portfolios accordingly.