UBS Turns Bullish on Equities After S&P 500 Holds Flat Despite 13% Momentum Stock Drop
Updated
Updated · CNBC · Aug 4
UBS Turns Bullish on Equities After S&P 500 Holds Flat Despite 13% Momentum Stock Drop
2 articles · Updated · CNBC · Aug 4
Summary
UBS said July’s flat S&P 500 was a bullish signal because the broader market absorbed a sharp selloff in high-momentum stocks without breaking lower.
The iShares MSCI USA Momentum Factor ETF fell 13% in July—its worst month since April 2022—after a major repricing of the AI trade.
Keith Parker called the split between momentum stocks and the broader market an anomaly with no real precedent since the 1990s, arguing it looks like a healthy correction in an AI spending cycle only about two years old.
UBS said the resilience points to sector rotation and market broadening beyond AI, with investors still wanting tech exposure but increasingly prioritizing non-AI ideas.
Tuesday’s gains in Caterpillar and Palantir after strong earnings reinforced that broadening theme, suggesting equity leadership may be widening rather than fading.