STAY BULLISH ON STOCKS, UBS TELLS US INVESTORS

Back-to-back weeks of stock market declines should be used by investors as an opportunity to buy stocks at better levels, UBS said in a note on Friday, Matthew Fox wrote for BusinessInsider late on September 13, 2020.

Since record highs were recorded on September 2, the S&P 500 is down 7%, while the Nasdaq 100 is down 10%. Despite a combination of the US Senate's failure to pass a stimulus bill on Thursday, and a fourth consecutive week of rising jobless claims, UBS expects markets to "refocus on the positives." Recent negatives hitting the market include the US Senate failing to pass a $500 billion stimulus bill on Thursday, and the fourth consecutive week of rising jobless claims.

The reasons for the UBS advice are the following: 1. "Fiscal stimulus from the US has been delayed, not canceled, in our view." Despite Thursday's failure of the US Senate in passing another round of stimulus, future fiscal stimulus policies are still possible, UBS believes; 2. "Economic data remains positive." The past four weeks of rising jobless claims suggest the economic recovery from the COVID-19 pandemic is slowing, but "the broad trend remains positive," according to UBS, and; 3. "Central banks continue to innovate and provide ample liquidity." More monetary stimulus policies from the Federal Reserve, which have been historic in size and scope, are likely to be announced in the coming months, according to UBS.

UBS highlights a falling unemployment rate, which declined to 8.4% from 10.2% in August, and is well below the recent peak of 14.7%, in addition to US retail sales being above prior-year levels since June. And globally, economic data continues to beat forecasts, UBS said.

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