Ed Yardeni, president of Yardeni Research, has significantly raised his year-end forecast for the S&P 500, now projecting the index to reach 8,250. This revised target positions him as the most optimistic among leading Wall Street forecasters, suggesting an 11.5% climb from recent closing figures, building upon an 8% gain already achieved year-to-date. His updated outlook surpasses projections from other major firms, including Oppenheimer’s 8,100, Deutsche Bank’s 8,000, and Morgan Stanley’s 7,800, as well as Citigroup, JPMorgan, and Goldman Sachs, which all sit at 7,600. JPMorgan, notably, had previously adjusted its own S&P 500 view upwards last month after an earlier reduction.
The driving force behind Yardeni’s heightened optimism appears to be a robust earnings season that has outpaced even his own previously bullish expectations. He points to an unprecedented acceleration in consensus earnings expectations for both the current and forthcoming years. This rapid upward revision in corporate profitability has, in his view, fueled an “earnings-led meltup” in the stock market. Specifically, Yardeni now anticipates earnings per share for large-cap companies to hit $330 this year, an increase from his earlier $310 estimate, with 2027 EPS projected at $375, up from $350. Similarly, his forecasts for S&P 500 revenue per share for 2026 and 2027 have each seen a $100 bump, now standing at $2,200 and $2,300 respectively, figures that align closely with current consensus estimates.
This unwavering confidence stems from a core assumption that the economy will maintain its resilience, directly translating into sustained corporate earnings. This perspective has been a consistent theme for Yardeni, who began articulating his “Roaring 2020s” thesis in the summer of 2020. His conviction is rooted in the observation that the U.S. economy demonstrated remarkable adaptability, not only recovering swiftly from the COVID-19 pandemic but also navigating the supply chain disruptions caused by Russia’s conflict in Ukraine, the Federal Reserve’s aggressive interest rate hikes, and trade tensions under former President Donald Trump.
Yardeni has even increased the probability of this “Roaring 2020s” scenario continuing, raising it from 60% to 80% by integrating it with his “meltup” scenario, which previously held 20% odds independently. He contends that any market downturn would likely present a buying opportunity rather than signal a recession or a sustained bear market, maintaining his recession odds at a mere 20%. Despite his domestic market enthusiasm, he continues to recommend global stocks, particularly those in emerging markets excluding China, citing relatively more attractive valuations overseas.
The updated S&P 500 forecast arrives as U.S. stock indexes have repeatedly established new highs, having also rebounded from the selloff that followed the recent U.S.-Israeli conflict with Iran. Investors, it seems, are betting on an extension of the current ceasefire and an eventual peace that could reopen vital shipping lanes like the Strait of Hormuz, despite ongoing warnings from energy experts about dwindling oil inventories and potential supply cliffs. Yardeni acknowledges these geopolitical risks, including the possibility of renewed hostilities leading to stagflation, which could compel central banks to further hike rates and bond markets to react negatively. Nevertheless, he remains committed to a long-term target of 10,000 for the S&P 500 by the close of 2029, suggesting it might even be reached ahead of schedule.
