Ulrike Hoffmann-Burchardi, Chief Investment Officer Americas and Global Head of Equities at UBS, anticipates further gains in global equities by year-end. She attributes this positive outlook to a "broadening rally," where market performance is expanding beyond the concentrated leadership of a few mega-cap technology companies. This shift is seen as a natural progression in innovation cycles, where initial gains by technology enablers transition to companies that successfully generate revenue from new technologies.
The UBS Chief Investment Office (CIO) projects significant earnings growth to fuel this market expansion. They forecast S&P 500 earnings to increase by 25% in 2026 and an additional 14% in 2027. Profit growth for the median S&P 500 company is currently around 14%. This robust and broadening profit growth is expected to enable equities to absorb potentially higher yields without derailing the overall rally.
The broadening of the rally means that profit growth is spreading across various sectors, including cyclicals, financials, industrials, and mid-cap companies. This diversification provides the market with multiple engines for growth, reducing reliance on a few large entities and indicating a healthier underlying economy. Investors are advised to maintain diversified equity exposure, address concentration risk, and utilize quality bonds to enhance portfolio resilience.
