UBS downgrades US stock ratings, warning of multiple risks including policy and valuation

UBS has downgraded its rating of U.S. stocks in its 100% equity portfolio to benchmark, or neutral allocation, while maintaining an overweight position on emerging market stocks. The bank pointed out that the U.S. market faces multiple adverse factors, including low operating leverage compared to other regions, downside risks to the dollar, lackluster buyback yields, and high valuations.
"Measured in dollars, the U.S. market's drawdown relative to the global market has reached its largest level in nearly 15 years," stated the strategy team led by Andrew Garthwaite in a client report on February 27. "Despite the rise of artificial intelligence, U.S. economic growth exceeding expectations, and President Trump retracting some tariffs."