According to UBS, the S&P 500 could surpass 5,600 if cooling inflation leads to interest rate cuts. Strategist Jonathan Golub said even the target he set in late May could be left behind after this year’s market rally. And if that target is both met and not exceeded, it would still mean the benchmark index would be up another 3.3% from where it ended Wednesday – and move deeper into record high territory. green. Golub wrote to clients that the initial increase to 5,600 was due to “earnings improvements and reduced tail risk.” Now, “falling inflation and falling interest rates (as UBS economists predict) offer even greater upside potential.” .SPX YTD Mountain .SPX YTD Although the number of expected rate cuts in 2024 has spiked, three to four rate cuts are now expected in the next 12 months, Golub notes idea. This is up from forecasts of less than two at the end of April and may signal growing expectations of future monetary policy easing. He also noted that Treasury yields continue to decline, while earnings forecasts and overall financial conditions continue to improve. Golub’s 5,600 estimate puts him tied with BMO’s Brian Belski as the most bullish market strategist on Wall Street, according to a CNBC Pro survey. If Golub officially raises it above that level, he will stand alone with the highest goal. (For comparison, the average analyst predicted the S&P 500 would end the year at 5,220.) That marks a major turnaround from where Golub started 2024. He initially predicted the S&P 500 will end the year at 4,850, which is approximately 15% below his current estimate. The benchmark index has risen about 14% since the beginning of the year.