UBS's Lovell Puts the Rally on Earnings, Not Multiples

Nadia Lovell, head of global equity strategy at UBS Global Wealth Management, said on Bloomberg Surveillance that broadening profit growth rather than valuation expansion should keep equities rising, even as higher rates stir near-term volatility, with the S&P 500 tracker SPY at $759.77 and down 0.37% as of 17:46 GMT on Sept. 18, 2026.

Nadia Lovell, head of global equity strategy at UBS Global Wealth Management, put a stake in the ground on Friday: the next leg of this equity market is a profits story, not a re-rating story. Speaking on "Bloomberg Surveillance," she said strong earnings and a broadening of profit growth should keep stocks moving higher, while acknowledging that rising rates are generating volatility in the near term.

"What's gonna drive this market is earnings. It's not valuation expansion," Lovell said, in remarks carried by Bloomberg Markets.

That is a deceptively large claim. It reassigns responsibility for returns away from the Federal Reserve and the discount rate, and onto corporate income statements. If she is right, the policy calendar matters less than the reporting calendar. If she is wrong, the market has removed its safety net at exactly the moment rates are working against it.

Why the distinction between earnings and multiples matters

Share prices move for two reasons. Either companies earn more, or investors agree to pay more for each dollar of those earnings. The first is the earnings-per-share line. The second is the price-to-earnings multiple — how many years of profit the market will pay up front for a claim on a business.

Multiple expansion is the easier of the two to get and the easier to lose. It tends to arrive when interest rates fall, because a lower discount rate makes distant profits worth more today. It leaves just as quickly when rates back up. Earnings growth is slower and harder, but it is also the part of the return that a rising bond yield cannot simply confiscate.

Lovell's framing says the cheap portion of the return is spent. What remains has to be earned by companies delivering. That is a more demanding market to be long in, though arguably a more durable one, because it is less hostage to what any single central bank meeting produces.

Breadth is the load-bearing part of the argument

The word doing the most work in her comments is "broadening." A market where profit growth is concentrated in a handful of very large companies is a market with a narrow base. Index returns in that setup depend on a small group continuing to beat expectations, and the rest of the market contributes little but risk.

Broadening profit growth means the contribution spreads — into cyclicals, financials, industrials, the mid-cap tier. That does two useful things. It gives the index more than one engine, and it usually improves the quality of a rally, because gains stop being a story about a few crowded positions and start being a story about the economy.

It also sets a clear test. Investors can check the claim directly when results arrive: is the number of companies growing earnings widening, or is the index still being carried by the same names? That is a verifiable proposition, not a mood.

Friday's tape shows the split she describes

The intraday picture on Friday fit the shape of a market sorting itself by earnings profile rather than moving as a block. As of 17:46 GMT on Sept. 18, 2026, the SPDR S&P 500 ETF Trust (NYSEARCA: SPY) traded at $759.77, down 0.37% from the previous close of $762.60, inside a session range of $757.97 to $762.54.

The Invesco QQQ Trust (NASDAQ: QQQ), which tracks the Nasdaq 100, went the other way, at $717.57 and up 0.09% against a prior close of $716.92, with a range of $715.08 to $720.20. The SPDR Dow Jones Industrial Average ETF Trust (NYSEARCA: DIA) was the weakest of the three at $515.15, down 0.62% from $518.35 and trading between $514.15 and $517.28.

A day in which the tech-heavy index holds flat while the thirty-stock industrial average falls is not evidence of broadening. It is closer to the opposite. One session proves nothing, but it does illustrate why the breadth question is the one to track rather than assume.

The rate problem Lovell concedes

She did not pretend rates are harmless. Rising yields create near-term volatility, in her telling — a timing and path problem rather than a thesis problem. That is a defensible position, but it has limits.

Higher yields hit equities three ways. They compress the multiple mechanically. They raise the cost of refinancing debt, which lands in the interest expense line and eats into the very earnings the bull case depends on. And they raise the return available from bonds, which is the competing asset. The first of those is consistent with Lovell's argument; the second is not, because it converts a valuation headwind into an earnings headwind.

So the call carries an implicit assumption: that revenue growth and margins are strong enough to absorb a higher cost of capital without stalling. That is the thing to watch, and it will show up in guidance before it shows up in reported results.

What would confirm or break the thesis

Three things settle this over the coming quarters, and none of them requires a view on the Fed.

• The share of companies growing earnings. If it widens, the broadening claim holds. If growth stays concentrated, the index is still a narrow trade wearing a diversified label.
• Margins under a higher cost of capital. Watch interest expense and whether companies preserve operating margin while refinancing at current rates.
• Whether multiples stay put. Lovell is not forecasting a re-rating. If prices rise faster than profits anyway, the market is contradicting the stated logic of the rally even while validating its direction.

For an investor, the practical consequence of taking the earnings-over-multiples view seriously is a shift in what gets bought. It argues for businesses with visible profit growth and manageable leverage, and against positions that only work if the discount rate falls. It also argues for treating each reporting season as the main event rather than a footnote to the policy meeting that precedes it.

Lovell's position, stripped down, is that the Fed has been overweighted as a market driver. Whether or not that is right, it is a testable statement — and the test starts with the next round of results.

Key facts

• SPY (S&P 500 tracker): $759.77, -0.37%, as of 17:46 GMT Sept. 18, 2026
• QQQ (Nasdaq 100 tracker): $717.57, +0.09%, same time
• DIA (Dow 30 tracker): $515.15, -0.62%, same time
• Strategist: Nadia Lovell, head of global equity strategy, UBS Global Wealth Management

Frequently asked questions

What exactly did Nadia Lovell say?

Speaking on Bloomberg Surveillance, the UBS Global Wealth Management head of global equity strategy said strong earnings and broadening profit growth should keep stocks moving higher, even though rising rates are creating near-term volatility. Her direct quote was: "What's gonna drive this market is earnings. It's not valuation expansion."

What is the difference between earnings growth and valuation expansion?

Earnings growth means companies are actually producing more profit per share. Valuation expansion means investors are willing to pay a higher price for each dollar of existing profit, usually because interest rates have fallen. Returns driven by earnings tend to be more durable; returns driven by multiples can reverse quickly when rates rise.

Why does 'broadening' profit growth matter to investors?

A narrow market depends on a small group of very large companies to deliver the index return. Broadening means profit growth is spreading across more sectors and more companies, giving the index several engines instead of one. It generally signals a healthier underlying economy and reduces the risk concentrated in a few crowded positions.

Where were the major index trackers trading on Sept. 18, 2026?

As of 17:46 GMT, the S&P 500 tracker SPY was at $759.77, down 0.37% from a prior close of $762.60. The Nasdaq 100 tracker QQQ was at $717.57, up 0.09%. The Dow tracker DIA was the weakest at $515.15, down 0.62% from $518.35.

How do rising interest rates hurt stocks?

Three ways. Higher yields mechanically compress valuation multiples by raising the rate at which future profits are discounted. They increase refinancing costs, which raises interest expense and cuts into reported earnings. And they make bonds a more attractive competing asset, drawing money away from equities.

What should investors watch to test this call?

Three measurable things: the share of listed companies actually growing earnings, which tests the breadth claim; operating margins and interest expense, which show whether a higher cost of capital is eating into profits; and whether price-to-earnings multiples stay flat rather than expanding, which would indicate the rally is not behaving the way the thesis describes.

Sources

• Earnings, Not the Fed, Are Driving Stocks: UBS's Lovell — Bloomberg Markets