Nadia Lovell, head of global equity strategy at UBS Wealth Management, joins CNBC's ‘Squawk on the Street' to discuss the market, how potential Fed cuts could impact your portfolio, and more.

Nadia Lovell, Head of Global Equity Strategy at UBS Wealth Management, stated that ongoing market volatility has not altered her positive outlook on equities. She highlighted strong economic fundamentals, projecting at least 10% earnings growth for the S&P 500 in the coming year and suggesting the index could reach 7,700 by next year or December 2026.

Lovell expects the Federal Reserve to cut rates in December, citing softening labor market data. She also emphasized that while the U.S. remains a key focus due to structural growth trends, international markets such as Europe, China Tech, and parts of Japan are expected to benefit from a global economic recovery, supporting a balanced investment approach.

UBS' Lovell: We think the Fed will cut in December

We're joined here at Post 9 this morning by Nadia Lovell, UBS Wealth Management Head of Global Equity Strategy. It's great to have you, Nadia. Good to see you. Has any of this volatility shaken the house for you? No, it hasn't. You know, we understand that markets are likely to remain volatile near term, but we like to take advantage of these sort of technical pullback. It's clear that some of this is being driven by repositioning of a systematic community so we could see volatility remain in the near term. But when you look at the fundamentals, right, we have an economy that's still growing. And when we look into 2026, we think we're going to see trendline growth, 2% earnings. That has been quite strong this past earnings season. And into next year, we think we're going to get 10% at least earnings growth, right? So when you all stitch all of that together, it's really hard to see anything that really derails this bull market in a sustainable way. So we think that we could see an S&P that gets to 7,700 next year. By December of 26. Does the earnings growth emphasis on Mag 7 take some of the shine off? The idea that the other 493 aren't seeing those kinds of upward revisions? You're not seeing like the same magnitude that you're seeing in the Magnificent 7, but you are seeing a broad in and out of earnings. You saw it in the third quarter earnings season and we expect that to continue into 2026. You know, the fact is we have an economy that's still growing that should help the cyclical areas. And if we do get those Fed cuts, those interest sensitive areas of the market should be able to participate again. And we think that we will get at least 50 basis point cut by the end of the first quarter. Given that we're not expecting major government data before the December meeting, earnings season is mostly over. Do you feel like the market is kind of driving in the fog as Chair Powell had had used that analogy before? And do you think the bias at this point, whether we're relying on kind of what the systematic strategies are doing or otherwise, is still to the upside because it feels like at least this week, maybe last week, there's been more of a sentiment shift on that front? Yes. So, of course, we've seen a bit of sentiment shift in terms of some downward pressure on the market. But we do think that it still sets up well into year end. Positioning is cleaning up. So that should help as well. And we'll see what the spending season, the coming holiday season looks like. But I think once you pair back the onions and really look at the fundamentals, we do think that long owners will take this opportunity to engage and really buy the dip. It could take another week or so, though, Leslie. Another week or so. That's not too long. It's not too long. But look how quick sentiment changes. Right. That's the point about sentiments. But the fundamentals are still there. And while we've been in this sort of data blackout, you know, we do think that the Fed will cut in December because the labor market data, the anecdotal data, the private data does point to a softening in the labor market. So it's hard to see the Fed remain on the sideline, even though it's feeling like it might be a coin flip. Right. We know about the U.S. underperformance versus the rest of the world this year. And there have been some high profile calls for that to continue for maybe the next decade. You think that's true? Don't think that, too, because we think that the structural growth trends are strongest in the U.S. around AI, around power and resources, the electrification story that's happening, as well as longevity. And when we think about longevity, we're thinking about people living longer and health care. We're seeing a pickup in health care just in the last few weeks. Well, that's not to say that the international markets won't perform well as well, particularly like Europe. We do think that Europe can benefit from a recovery in the global economic environment. China Tech also, we think, can do well and parts of Japan as well. So it's about a global broadening story and not necessarily saying that you only focus on the U.S. It's having that more balance before. But do you think you're overweight in the U.S.? We are. We are overweight in the U.S., but we also have an attractive view as well on Europe and as well on China Tech.

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