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Members of the Federal Open Market Committee will likely leave rates unchanged in March, as per minutes of their most recent meeting released on Wednesday.

Officials remain cautious of cutting rates too soon

Officials expressed optimism on the progress made on inflation but remained cautious of lowering rates too soon. All in all, they agreed to hold back on easing policy until they have more confidence that inflation indeed was receding.

Still, Jonathan Golub – the head of U.S. equity strategy at UBS is convinced the S&P 500 will hit the 5,400 level in 2024.

He raised his earnings estimate for this year in a recent research note to $240 and said “despite our bullish outlook, it appears we were not bullish enough”.

Note that the benchmark index is already up some 6.0% versus its year-to-date high at writing.

Why is UBS now more bullish on the S&P 500 index?

Last week, the U.S. Bureau of Labour Statistics said inflation was up 3.1% in January – versus a 2.9% increase expected.

Still, Golub of UBS is convinced “these demand-driven readings are constructive for future returns”. Recent economic data, he added, suggests the consumer is keeping resilient and the U.S. economy continues to thrive.

The strategist is particularly bullish on healthcare for defensive investments and expects banks and finance to benefit as well from a relaxed lending criteria and a potential rebound in M&A (mergers and acquisitions) in 2024.

Earlier this week, Goldman Sachs also raised its year-end target for the benchmark S&P 500 index to 5,200. That suggests another 5.0% upside from here.

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