UBS Analysts Outlook

UBS analysts believe that market fundamentals will soon reassert themselves as the primary drivers of market direction, following the recent volatility associated with the upcoming U.S. presidential election.

> "Once the dust settles, we think fundamentals should reclaim their spot in the driver's seat, determining the market direction," UBS stated.

The bank points out the resilience of the U.S. economy, referencing recent labor data. The Job Openings and Labor Turnover Survey (JOLTS) revealed that job openings have decreased to 7.4 million in September—the lowest since January 2021—indicating a cooling labor market that remains stable.

UBS also highlights important data releases this week, including the PCE inflation gauge, GDP figures, and the Employment Cost Index, which will provide additional insights into economic health.

> "Recent data suggest the U.S. economy is stronger than previously thought, and the broad disinflationary trend remains intact," UBS added.

The firm anticipates that the Federal Reserve will pursue policy easing, predicting a 25-basis-point rate cut at its meeting on November 7. UBS expects a total of 50 basis points of rate cuts for the remainder of the year and an additional 100 basis points in 2025. The bank noted that such cuts during non-recessionary periods historically bolster equity markets.

Looking forward, UBS maintains an optimistic outlook for tech stocks, especially in the AI sector.

> "Early results from key semiconductor names pointed to healthy and sustainable AI demand," UBS mentioned. Alphabet (NASDAQ: GOOGL)’s robust cloud growth and increased capital expenditures, along with forthcoming reports from other tech giants, further highlight the positive technology outlook.

UBS continues to rate U.S. equities as "Attractive," projecting that the S&P 500 will reach 6,600 by the end of 2025 as economic strength, disinflation, and AI investments foster a favorable environment for risk assets.