• UBS advises clients not to fear the S&P 500's historical September weakness or new all-time highs.
  • The bank projects the index will reach 6,800 by mid-2026, driven by strong earnings, Fed rate cuts, and an AI investment boom.
  • Historical data shows the market has typically advanced further after hitting record levels, averaging a 12% return in the following year.

UBS Group AG, the world’s largest private bank, is urging investors to maintain a bullish stance on US equities despite a rocky start to September and a market at record highs. The S&P 500 dipped 0.7% to begin the month, which has historically been the weakest period for stocks, having declined in six of the past ten years with an average drop of 2%.

The bank’s analysis, however, looks beyond this seasonal soft patch. UBS expects the S&P 500 to climb to 6,800 by mid-2026, a forecast underpinned by three core pillars. First, corporate earnings momentum remains robust, with a striking 81% of companies having surpassed second-quarter estimates. Second, the bank anticipates the Federal Reserve will implement 100 basis points of rate cuts over its next four meetings, easing monetary policy. Finally, long-term growth is expected to be fueled by a global artificial intelligence capital expenditure boom, projected to reach $500 billion by 2026.

This optimistic outlook challenges any notion that new market highs signal an impending peak. According to UBS's research, since 1960, the S&P 500 has delivered an average return of 12% in the year following an all-time high and a staggering 38% over the subsequent three years. This data suggests that record levels are often a launching pad for further gains rather than a ceiling.

The bank’s reassurances come as it continues to integrate Credit Suisse following its historic acquisition in 2023, a move that solidified its position as a systemically important global institution managing over $6 trillion in assets. A spokesperson for UBS declined to comment beyond the published research note. The call to look past short-term volatility reflects a broader confidence in the structural drivers of the US economy, particularly the transformative potential of AI investment and a shifting interest rate environment.