U.S. Stocks Outlook: UBS Explains Why the Market Can Keep Climbing

UBS said it remains constructive on U.S. equities even as investors monitor developments surrounding a Supreme Court review of President Donald Trump’s “reciprocal” tariffs.

The S&P 500 closed higher last week, rising 0.65% on Friday.

The Supreme Court is weighing whether the International Emergency Economic Powers Act of 1977 gives the president authority to impose tariffs.

UBS said “uncertainty remains over how the Supreme Court will rule,” adding that prediction market Polymarket currently assigns a 25% chance of the administration prevailing.

If the court rules against the use of IEEPA, UBS expects the White House to rely on other trade tools. The bank highlighted that “Section 122 of the Trade Act of 1974 allows for up to 15% tariffs for 150 days,” while other mechanisms, such as Section 201, 232, and 301, offer more durable but slower options.

UBS believes a potential change in tariff authority is unlikely to materially shift conditions early on, though fiscal concerns may reemerge as markets assess the loss of tariff revenues.

Even so, the bank argued that any refund impact, estimated at $130 billion to $140 billion, would equal roughly half a percent of 2025 GDP.

UBS reiterated a positive view on U.S. stocks, citing a resilient economy, improving earnings and expected Federal Reserve easing.

The bank said a lower effective tariff rate “could improve household spending power and sustain corporate profit growth.” UBS also maintained support for diversified portfolios, gold as a hedge and selective alternatives.