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UBS sees end of S&P 500 profit recession, index to 4,700 by June 2024

Press conference of Swiss bank UBS, in Zurich

(Specifies UBS Global Wealth Management in 1st paragraph)

By David Randall

NEW YORK (Reuters) -Earning expectations among companies in the benchmark S&P 500 are back to all-time highs, suggesting that the decline in corporate profits that sparked fears of a U.S. recession in 2023 is over, said David Lefkowitz, head of U.S. equities at UBS Global Wealth Management, in a note Wednesday.

"The improving profit picture is one of the key reasons that we think the market can hold on to its year-to-date gains," he said, citing the nearly 20% gain in the S&P 500 for the year to date.

The market will likely remain "range-bound" over the fourth quarter as the resumption of student loan payments and a cooling labor market weigh on economic growth, he said. UBS expects the S&P 500 end the year at 4,500, up around 1% from its trading price Wednesday, and reach 4,700 by June.

Overall, profit expectations for the median company in the S&P 500 are up 5.6% since July 2022, UBS said, while estimates are at or above all-time highs in every sector but energy, healthcare, and materials.

(Reporting by David Randall)