UBS on the Federal Open Market Committee (FOMC) rate cut and outlook for US equities.
In summary:
- With signs that inflation is being brought under control, the Federal Reserve can now shift its focus to fostering job growth and economic expansion while managing the risk of a recession.
- UBS continue to expect 100 basis points of rate cuts in 2024.
- UBS add that the recent dot plot aligns with their forecast for the pace of monetary easing through the end of 2025.
- On stocks, UBS analysts say that historically stock markets have performed well when the Fed reduced interest rates without the economy being in a recession, and they anticipate the same outcome this time. Their outlook remains that the S&P 500 will reach 5,900 by the end of this year and rise to 6,200 by mid-2025.
