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The ‘Roaring 20s’ are back and will take the S&P 500 to new heights, says market veteran Ed Yardeni.
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The president of Yardeni Research predicted that the benchmark index could reach 8,000 by the end of this decade.
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The upward momentum will be driven by AI and improving corporate profits, he said.
According to market veteran Ed Yardeni, the bull market in stocks will last at least until the end of this decade.
Speaking on the David Lin Report this week, the president of Yardeni Research reiterated his bullish forecast for stocks. The S&P 500 is on track to reach 6,000 points by the end of 2025 and could rise to 8,000 points by the end of the decade, he predicted, implying another 46% rise for the benchmark index.
A confluence of bullish factors will lead to that, Yardeni said, noting that he believes the “Roaring ’20s” are back.
“I’m still optimistic. I think it’s a bull market… These are all my base case scenarios, 60% likely, the Roaring 2020 scenario,” he said of his price targets.
Stock markets appear to be on a good trajectory given the strength of the U.S. economy, Yardeni said. Despite fears that the US would enter a recession, the economy has continued to grow. GDP is expected to grow another 3% this quarter, according to economists at the Atlanta Fed.
A strong economic environment also fuels confidence in corporate profits. Earnings estimates for the next twelve months on Wall Street are currently at an all-time high, reflecting the bullish mood among forecasters.
Then there’s the ever-growing investor excitement about the potential of artificial intelligence, which has driven mega-cap tech stocks steadily higher over the past eighteen months.
“There’s been a tremendous amount of excitement about artificial intelligence, and the reality is that tech companies have reported some pretty fantastic profits,” Yardeni said, pointing to stellar profits at companies like Nvidia and Oracle. “The news just continues to be very exciting about the technology revolution, which I think is driving the Roaring 2020s,” he added.
Equities still face some risks in the coming year. The market has a 20% chance of a “melt-up” and a subsequent “meltdown” if stock prices rise unsustainably, Yardeni said, echoing other forecasters who have warned of a possible market correction after a long run of stellar performance.
Read the original article on Business Insider
