UBS analysts are urging investors to take advantage of the recent equity pullback in the U.S., noting that historical data shows buying the S&P 500 at a drawdown of around 10% has delivered superior absolute and risk-adjusted returns. According to Head CIO Global Equities Ulrike Hoffmann-Burchardi, entering the market after a 10% decline is preferable to waiting for a deeper correction of 15–20%, which could lead to missed opportunities if the market rebounds quickly.
The recent pullback—now exceeding 10% from the February peak—is attributed to rising policy uncertainty and signs of softer economic momentum. Despite these near-term risks, UBS does not foresee a recession this year and forecasts around 2% GDP growth over the next 12 months. Current market conditions are reminiscent of 2011, when debt ceiling gridlock and sluggish growth were offset by a swift recovery.
With the S&P 500’s forward P/E ratio compressing from 22.4x in mid-February to 20.2x in mid-March, the conditions appear favorable for buying at these lower levels, even if the entry is accompanied by significant short-term losses. UBS warns that waiting for a larger drawdown might only result in missed opportunities if the market quickly reverses.
FMP API Insights
? Historical Earnings APIAccess historical earnings data to review how U.S. equities have performed during previous corrections, helping to assess the potential upside of entering at a 10% drawdown.
? Technical (Williams %R) APIEvaluate market momentum and identify oversold conditions to support investment decisions during pullbacks.
Conclusion
UBS’s recommendation to buy U.S. equities at a 10% drawdown is rooted in historical evidence and current market conditions, which resemble past non-recessionary slowdowns. With a compressed forward P/E ratio and modest GDP growth forecasts, the current pullback presents an attractive entry point. Investors should leverage detailed historical and technical data from the Historical Earnings and Technical (Williams %R) APIs to make informed decisions in this environment.
