Global stock markets extended their advance this week as U.S. equities hit new highs and oil retreated amid diplomatic talks. The S&P 500 closed at 7,022.95 on Wednesday, eclipsing its prior January peak. At the time of writing on Thursday, Brent futures were trading at $96.35.
Strategists at UBS said the market's ascent still has room to run over the remainder of the year, supported by strong earnings and an economy that has held up despite higher energy costs. "We have recommended investors to position for medium-term equity gains since the start of the conflict, and we continue to see healthy potential for a rally for the remainder of this year from the current S&P 500 levels," the team led by Mark Haefele wrote.
UBS expects corporate profits for the S&P 500 to increase by roughly 17% in the first quarter, which the bank said would be the fastest pace since the fourth quarter of 2021. The firm attributed the profit strength to broad-based momentum across the market and to robust demand for semiconductors driven by AI infrastructure spending.
Beyond technology-related strength, UBS said it anticipates above-average earnings growth in Financials and Materials. The strategists also noted that forward guidance could be more resilient than feared, writing there is "a good chance that forecasts will be better than feared." So far, earnings revisions show little sign of a meaningful negative impact from the conflict, with the bottom-up 12-month S&P 500 earnings-per-share estimate continuing to move higher.
On macroeconomic indicators, UBS highlighted several supportive factors for U.S. asset performance. Underlying inflation in March was milder than expected, consumer spending remained healthy, and manufacturing activity returned to expansionary territory for the first time in three years. Company comments from consumer-facing businesses also pointed to generally stable demand trends.
Against that backdrop, UBS retained an Attractive rating on U.S. equities and identified several sectors it prefers: Consumer Discretionary, Financials, Healthcare, Industrials, and Utilities.
At the same time, the strategists cautioned that short-term uncertainty persists. Energy flows through the Strait of Hormuz remain disrupted, and it is unclear whether upcoming U.S.-Iran negotiations will yield a meaningful de-escalation. The bank said oil is unlikely to return to pre-conflict levels in the near term and advised that "investors should be prepared for continued bouts of market volatility."
Context and implications
UBS's outlook blends an earnings-driven bullish case with a recognition of geopolitical and commodity-related risks. The firm points to cyclical pockets of strength and AI-driven semiconductor demand as key drivers of profit growth, while signaling that energy-market dynamics could keep episodic volatility elevated.