UBS believes that US stocks are expected to achieve another double-digit increase next year.

The bank's strategists were bullish on US stocks in a report last Friday, predicting that the S&P 500 index will reach 6,600 points by the end of next year.

The strategist said that this forecast means that the benchmark index has room to rise by about 13% compared to the current level, and the “no landing” of the economy will drive this rise.

Under these circumstances, economic growth continues and the job market remains strong. And in the economy”hard landing” or”soft landing” In this case, inflation and interest rates may still be slightly higher than the market's previous expectations.

“Most importantly, the improved macroeconomic outlook in the US has increased our confidence in a positive view of stocks. We have upgraded the US stock rating from neutral to attractive,” the strategist wrote in a report last Friday, pointing out that the data shows that the US economy is on a solid foundation.

Facts have proven that the job market is resilient despite tight financial conditions and high interest rates. According to the US Bureau of Labor Statistics, the US added 0.254 million jobs in September, far higher than the expected 0.147 million. Meanwhile, the unemployment rate fell to 4.1%, which is still close to an all-time low.

Economic activity also remained strong. Retail sales in the US rose 0.4% in September, higher than expected, and GDP increased 3% year over year in the second quarter.

Meanwhile, the inflation rate is approaching the Federal Reserve's 2% target. Consumer prices (CPI) recorded an annual rate of 2.4% in September, while personal consumption expenditure (PCE), the Federal Reserve's preferred inflation indicator, increased 2.2% year-on-year in August, the lowest level since 2021.

UBS said that the slowdown in price growth has laid the foundation for the Federal Reserve to continue cutting interest rates, which is beneficial to the stock market. According to CME's FedWatch tool, the market is 72% likely that the Fed will cut interest rates by another 50 basis points before the end of the year.

The strategist added that while investors may see some fluctuations before the November election, this is unlikely to offset more positive market catalysts.

“The US presidential election is unlikely to disrupt positive fundamentals. We expect market volatility to rise before the election, as neither party has a clear advantage in any of the key swing states that will have a decisive influence on the election results. But this election is being held against the backdrop of supportive long-term trends such as the Federal Reserve's interest rate cut, the strong momentum of the US economy, and the artificial intelligence (AI) boom,” the report added.

Other forecasters said that considering the potential strength of the US economy, a “no landing” seems more likely. Despite this, the New York Federal Reserve believes there is a 57% chance that the economy will fall into recession by September 2025.