- Market expert Ed Yardeni says the “Roaring Twenties” will return and propel the S&P 500 to new heights.
- The president of Yardeni Research predicted that the benchmark index could reach 8,000 by the end of the century.
- He said the upward momentum would be driven by AI and improving corporate earnings.
According to market veteran Ed Yardeni, the stock market bull market should continue through the end of the century.
In this week’s David Lin Report, the president of Yardeni Research reiterated his bullish outlook for stocks, predicting that the S&P 500 could reach 6,000 by the end of 2025 and rise to 8,000 a decade later, implying a further 46% rise for the benchmark index.
Yardeni said a confluence of bullish factors would do that, noting that in his view, the “Roaring ’20s” are back.
“I remain bullish. I think we’re in a bull market. These are all my base case scenarios, and there’s a 60% chance that the boom-year scenario in 2020 will come true,” he said of his price target.
Yardeni said stocks seem to be on a good trajectory given the strength of the U.S. economy. Despite concerns that the U.S. could slip into recession, the economy continues to expand, with GDP expected to grow another 3% this quarter, according to economists at the Atlanta Fed.
A favorable economic environment is also boosting confidence in corporate earnings: Wall Street’s 12-month earnings forecasts are currently at their highest level ever, reflecting forecasters’ bullish mood.
Moreover, investors’ growing enthusiasm for the potential of artificial intelligence has driven a steady rise in big tech stocks over the past 18 months.
“The excitement around artificial intelligence is tremendous, and indeed tech companies are reporting impressive earnings,” Yardeni said, pointing to impressive gains from companies such as Nvidia and Oracle. “The news has been very exciting about the technology revolution, which I think is driving the Roaring 2020s,” he added.
The stock market still faces several risks over the coming year. Yardeni said there is a 20% chance of a market “melt up” followed by a “melt down” if stock prices rise unsustainably, echoing other forecasters who have warned of a possible market correction after a long period of strong performance.
