UBS Downgrades U.S. Stock Market on Dollar Risks, Slowing Buybacks

2026-02-27 16:34:54

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Amid a weak start to the year for the S&P 500 (SPX) compared to its worldwide peers, UBS (UBS) has downgraded American equities to “benchmark” in a fully invested global equity portfolio.

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UBS Head of Global Equity Strategy Andrew Garthwaite notes several concerns, such as a weakening dollar, a slower pace of corporate buybacks, and volatile policies under the Trump administration. The U.S. dollar index, which tracks the greenback against a basket of major currencies, has fallen by nearly 9% over the past year, with Garthwaite predicting that the euro will rise to $1.22 by the end of the first quarter.

Buybacks Cool, Uncertainty Drives U.S. Outflows

In addition, the scale of U.S. corporate buybacks has edged lower and is now broadly in line with the rest of the world. Some of that capital has gone toward building out AI infrastructure as big tech commits hundreds of billions to the mission.

“The buybacks yield is no longer exceptional and this had been an important driver of funds flow, EPS and valuation,” wrote Garthwaite in a note.

Finally, the unpredictability of the Trump administration has led to outflows from U.S. stocks. UBS has a year-end price target of 7,500 for the S&P 500, lower than the average Wall Street estimate of 7,629.

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