May 28 Reuters UBS Global Research raised its yearend target for the benchmark SP 500 index to 5,600 points on Tuesday, marking the highest forecast among major brokerages.

The upgraded target reflects an upside of about 5.6 to the index39;s last close of 5,304.72. It had earlier forecast a target of 5,400.

WHY IT39;S IMPORTANT

The SP 500 is up 11.2 so far this year and is at nearrecord levels, driven by bets of falling borrowing costs this year and increased optimism surrounding AI.

Stronger earnings forecasts and a supportive economic backdrop, with fading risks of recession, will propel U.S. equities, UBS said.

For 2024, UBS strategists, led by Jonathan Golub, raised their earningspershare EPS forecast to 245 from 240, implying an 11.4 growth through the year.

CONTEXT

UBS boosted its forecast to 5,400 in February from 5,150, saying that higher U.S. inflation tended to be positive for stock prices and would likely benefit corporate margins through increased pricing power.

With the current rejig in forecast, UBS joins major brokerages such as Deutsche Bank and Wells Fargo, which have also predicted the index would end at 5,500 or higher in 2024.

Deutsche Bank raised its 2024 yearend SP 500 target to 5,500 last week, banking on strong corporate earnings supporting equity valuations, while BMO Capital Markets predicted a 5,600finish earlier this month.

Reporting by Roshan Abraham in Bengaluru; Editing by Janane Venkatraman

Source Reuters