UBS turns bullish on equities after an unusual July in the stock market

July was a strange month for markets. The S&P 500 went essentially nowhere, closing the month flat. Meanwhile, the Philadelphia Semiconductor Index dropped more than 20%. That kind of divergence, broad index calm while a major sector craters, is not something you see every day. UBS looked at that setup and decided to get more bullish. The Swiss banking giant has raised its year-end 2026 target for the S&P 500 to 7,900, up from a prior estimate of 7,500. The firm also reaffirmed that the broader bull market in US equities remains intact, citing strong corporate earnings and a Federal Reserve it expects to stay patient on rates. What actually happened in July The flat S&P 500 reading obscures a pretty dramatic story underneath. The semiconductor sector, long the engine of the AI trade, took a serious hit. The Philadelphia Semiconductor Index fell more than 20% during the month, reflecting growing investor skepticism about the pace of AI monetization and the near-term profitability of massive capital expenditure programs. But while tech was getting repriced, other sectors quietly held the index together. UBS analysts pointed to earnings growth across a broad range of indus...