UBS is urging investors not to be deterred by U.S. equities trading near record levels, arguing that solid earnings and the prospect of Federal Reserve rate cuts should continue to underpin markets.
- while September has a reputation as a weak month for equities, the broader backdrop remains supportive.
- “Periods in which the Fed cuts interest rates while the economy is still growing have historically been linked with positive equity market returns,”
The S&P 500’s forward price-to-earnings ratio, at around 22 times, sits near the top of its historical range, but UBS argues this is justified by strong profit growth:
- also dismissed concerns about all-time highs, noting that since 1960 the index has delivered average returns of about 12% in the year after hitting a record, and 38% over the subsequent three years.
This article was written by Eamonn Sheridan at investinglive.com.
