Analyst Says U.S. Stock Rally Should Continue, Sees S&P 500 Hitting 7,300 by June 2026

UBS analysts believe the U.S. equity rally to advance well into next year, with the S&P 500 projected to reach 7,300 by June 2026, supported by strong earnings, a favourable monetary backdrop and ongoing investment momentum.

The bank noted that US equities overcame recent volatility to notch new record highs, adding that the latest consumer price data has “offered reassurance to markets that the Federal Reserve is on track to cut interest rates this week.” The Fed cut rates by 0.25 percentage points on Wednesday. 

The bank stated that with inflation cooling and rate cuts likely to continue into early 2026, “the macro environment is favourable” for stocks.

According to UBS, history supports further gains: “Data going back to 1970 shows that the S&P 500’s average annualized return was just below 10%, and it rises to 12% when the US economy is not in recession. But investors enjoy the best returns (15%) when the economy is not in recession and the Fed is cutting rates.”

Earnings have also exceeded expectations. Companies representing roughly a quarter of the S&P 500’s market capitalization have reported results, and UBS said “the magnitude of the beats is larger than the historical average.” 

Corporate profit growth is now expected to surpass the firm’s initial 10% forecast for the quarter.

UBS also pointed to surging artificial intelligence investment as a key growth driver, citing “strong demand for computational resources” and “robust AI capital spending.” 

The bank maintains an Attractive rating on U.S. equities and recommends exposure to “Transformational Innovation Opportunities of AI, Power and resources, and Longevity.”