Swiss firm UBS is bucking the more bullish tone on Wall Street. UBS Wealth Chief Investment Officer Mark Haefele has reportedly downgraded U.S. stocks to “neutral” from “attractive.” In a mixed message, Haefele said he is not advising investors to flee the equities markets but instead to capitalize on the latest stock market gains after selling was overdone in early April on tariff-related developments. Last month, UBS upgraded U.S. equities, since which time the S&P 500 has climbed approximately 11% higher. He warned:
“While the 90-day cooling-off period has provided a reprieve, uncertainty is still high, and investors will soon begin to focus on whether this temporary fix can evolve into a lasting agreement. The constructive tone from both sides suggests a willingness to negotiate further, but challenges in forging a durable deal could lead to bouts of volatility.”
The S&P 500 has erased its 2025 deficit and is now showing a positive return for the year. With a 0.24% year-to-date gain, it’s a far cry from last year’s double-digit percentage gain, but it’s also an impressive turnaround for the broader market index that has been in and out of correction territory this year. The S&P’s recovery has been driven by a trend of cooling inflation coupled with U.S. trade deal progress.
The S&P 500 full-year 2025 target revisions are rolling in. Most recently, Wall Street firm Goldman Sachs has tweaked its 2025 stock market performance outlook upward. Goldman Sachs Chief U.S. Equity Strategist David Kostin increased his 2025 S&P 500 prediction to 6,100, up from a former 5,900, reflecting upside potential of roughly 4% from current levels. Kostin wrote: “We raise our S&P 500 return and earnings forecasts to incorporate lower tariff rates, better economic growth, and less recession risk than we previously expected.”
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The markets are showing little direction or conviction despite better-than-expected inflation data and the recent trade agreement between the U.S. and Beijing. Stocks are stalling even as the U.S. economy further distances itself from a recession. The annual inflation rate fell to 2.3% in April, its lowest level since 2021. For the month, the Consumer Price Index (CPI) increased by a slight 0.2%, while prices for eggs, a common grocery item, declined by just over 12% in April. The inflation data was a welcome surprise considering April followed a period of heightened trade tensions, with an agreement and tariff reductions announced in May.
The SPY ETF is gaining 0.75% as of mid-morning trading alongside fractional gains in the S&P 500 index. Nvidia (Nasdaq: NVDA | NVDA Price Prediction) is tacking on about 5% today on a bullish outlook for the chip sector, while Microsoft (Nasdaq: MSFT) and Apple (Nasdaq: AAPL) are off fractionally. Microsoft announced that it will reduce its workforce by 3%.
Ed Yardeni, of the research firm that bears his name, has lowered the chances of a U.S. recession and raised his S&P 500 year-end target to 6,500, citing progress in U.S. trade deals.
Here’s a look at the performance as of morning trading:
Dow Jones Industrial Average: Down 135.36 (-0.32%)
Nasdaq Composite: Up 225.16 (+1.2%)
S&P 500: Up 36.05 (+0.62%)
Coinbase (Nasdaq: COIN) is soaring by 15% after further validating the cryptocurrency industry by clinching a spot in the S&P 500.
Builders FirstSource (NYSE: BLDR) is a winner in the S&P 500 index, gaining 5% on the day.
UnitedHealth Group (NYSE: UNH) is suffering a 12% decline amid further turmoil in the C-Suite. The healthcare giant announced CEO Andrew Witty would be leaving his post, owing to personal reasons. The company has named Stephen Hemsley as Witty’s successor. UnitedHealth has suspended its 2025 outlook.
Raymond James has started coverage of Super Micro (Nasdaq: SMCI) with an “outperform” rating, calling it a “nearly pure AI play.” The stock is up close to 12% today.
Goldman Sachs upgrades shares of Valero Energy (NYSE: VLO) from “neutral” to “buy” with a price target of $154 attached, reflecting upside potential of 15%.
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Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
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