How Earnings May Keep the Stock Market Rally Intact Through 2016

Stock valuations remain attractive relative to “very low-yielding bonds,” UBS says

by Ryan Vlastelica
Market Watch

The rally that U.S. stocks have enjoyed in 2016 should continue beyond the end of the year, with better-than-expected earnings growth likely to extend the market’s string of records, according UBS research analysts.

In a note released Aug. 29, UBS said it was “overweight” U.S. equities, and that it has a six-month price target of 2,225 for the S&P 500 That represents upside of about 2.5% from Tuesdays levels and would be another record for an index that has already recently closed at an all-time high of 2,190.15 on Aug. 5.

“We believe that easier comparisons from oil prices and the dollar, coupled with continued strength in consumer spending, should help S&P 500 [earnings per share] advance in the quarters ahead,” the firm wrote in a note to clients, adding that valuations remained attractive relative to “very low-yielding bonds.”

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