This article first appeared on GuruFocus.

UBS expects the S&P 500 (SPY, Financials) to reach 7,500 in 2026, citing stronger corporate earnings and improving global economic momentum. The investment bank forecasts about 14% earnings growth next year, with technology firms contributing nearly half of that increase.

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In a research note published Monday, UBS analysts described 2026 as a tale of two halves, with early economic headwinds easing as consumer confidence and fiscal support improve later in the year. The bank expects the U.S. to lead global equity markets, delivering around 10% total returns in 2026.

UBS said the index's advance will be driven primarily by earnings rather than multiple expansion. The contribution from valuation is likely to be a small negative, the analysts wrote, though they noted that persistent inflows could push market multiples modestly higher.

The firm anticipates a shift in market leadership by mid-2026, with gains broadening beyond large-cap technology names to include cyclical and lower-quality stocks. UBS also projects that European and emerging markets will post roughly 8% returns but slightly lag the U.S.