UBS said the Federal Reserve’s latest 25-basis-point rate increase should not derail the equity rally, despite policymakers signaling further tightening. The Fed unanimously lifted its target range to 3.75% to 4.00%, while Chair Kevin Warsh said officials had removed a dose of accommodation and that financial conditions were not clearly restrictive. Sixteen of 18 officials now expect at least one more hike this year, but UBS said markets had already priced in much of the tightening. The S&P 500 fell 0.4% and the two-year Treasury yield rose 1 basis point. UBS cited upgraded growth forecasts, a 1.2% increase in August retail sales, continued AI investment and strong earnings as support for equities. It forecasts industry capital spending will reach $1.2 trillion in 2027 from $900 billion, while S&P 500 profit growth is projected at 25% in 2026 and 14% in 2027. The bank remains positioned for further gains but expects near-term volatility, recommending diversified exposure and avoiding concentrated positions in rate-sensitive assets.