UBS Global Wealth Management cut its S&P 500 index target ​for 2026, citing higher oil prices amid the ongoing Middle East conflict ⁠that could pressure U.S. economic ⁠growth and inflation.

In a note dated April 6, the brokerage cut its year-end target to 7,500 from ​7,700 and trimmed its mid-year ​target to 7,000 ⁠from 7,300.

The benchmark index has fallen about 3.9% since the Iran war began on Feb. 28, as soaring oil prices and geopolitical risks prompted investors to pull back from equities.

In its base case, UBS expects the Middle East conflict to wind down over the coming weeks, which would allow the gradual resumption of energy flows.

But restoring oil production to pre-conflict levels will take longer, UBS ⁠said, ⁠given the widespread infrastructure damage and the time required to bring back full capacity, which could keep oil prices elevated.

"Higher energy prices are likely to modestly weigh on economic growth and keep inflation pressures firmer at the margin. In turn, this will likely delay the timing of additional Federal Reserve rate cuts," UBS said.

Last month, ⁠the brokerage also pushed back its Fed rate-cut expectations, now forecasting two 25-basis-point cuts in September and December, compared to its expectation of ​the cuts in June and September.

Despite the index target reduction, the ​current forecast implies a 13.43% upside to the S&P's last close of 6611.83.

UBS reiterated an "attractive" view ⁠on ‌U.S. equities ‌and kept its 2026 S&P 500 earnings ⁠forecast unchanged at $310 per share.

"As the ‌negative effects of the war begin to fade, we expect stocks to ​be buoyed by a ⁠combination of still solid profit growth, a ⁠Fed that remains broadly supportive even if policy easing is ⁠delayed, and ​the continued adoption and monetization of AI," UBS added.