UBS Global Research raised its year-end target for the benchmark S&P 500 index to 5,600 points on Tuesday, marking the highest forecast among major brokerages.

The upgraded target reflects an upside of about 5.6 per cent to the index’s last close of 5,304.72. It had earlier forecast a target of 5,400.

The S&P 500 is up 11.2 per cent so far this year and is at near-record levels, driven by bets of falling borrowing costs this year and increased optimism surrounding AI.

Stronger earnings forecasts and a “supportive” economic backdrop, with fading risks of recession, will propel US equities, UBS said.

For 2024, UBS strategists, led by Jonathan Golub, raised their earnings-per-share (EPS) forecast to $245 from $240, implying an 11.4 per cent growth through the year.

UBS boosted its forecast to 5,400 in February from 5,150, saying that higher US inflation tended to be positive for stock prices and would likely benefit corporate margins through increased pricing power.

With the current rejig in forecast, UBS joins major brokerages such as Deutsche Bank and Wells Fargo, which have also predicted the index would end at 5,500 or higher in 2024.

Deutsche Bank raised its 2024 year-end S&P 500 target to 5,500 last week, banking on strong corporate earnings supporting equity valuations, while BMO Capital Markets predicted a 5,600-finish earlier this month.