In a bold projection that will certainly attract attention, according to experienced Wall Street strategist Ed Yardeni calls for the S&P 500 index to rise to 10,000 by the end of this decade due to a “Trump 2.0” boost thereafter Donald Trumpthe recent election victory.
Yardeni, a veteran market analyst, said Tuesday that Trump’s return to the White House — alongside a likely Republican-controlled Congress — will bring a major regime change that will be positive for U.S. stocks, the economy and corporate profits.
Yardeni’s optimism stems from his belief that Trump’s policies will accelerate economic growth and improve the fiscal picture.
“We believe Trump 2.0 represents a major regime change that is positive for the economy and stocks,” Yardeni said in a note to investors, adding that a business-friendly environment could even help resolve lingering geopolitical tensions, as evidenced from the recent oil declines. and gold prices.
To support his S&P 500 forecast, Yardeni has adjusted his earnings forecasts for the companies that make up the index.
He now expects earnings per share for the S&P 500 to reach $285 in 2025, up from his previous estimate of $275. Its earnings per share projection for 2026 has also increased, from $300 to $320.
While much of the recent earnings growth in the S&P 500 has been led by a handful of tech giants – the so-called “Magnificent 7” – Yardeni now predicts a broader force ahead.
“We expect to see a broadening of the companies and sectors targeted by analysts in 2025,” he said.
According to Yardeni, Trump’s expected policies could push corporate profit margins to new heights. He predicts the S&P 500’s profit margin will rise to 13.9% in 2025 and 14.9% in 2026, levels he attributes to expected tax cuts, deregulation and productivity growth.
One major policy change Yardeni expects is a reduction in the corporate tax rate from 21% to 15%, along with tax breaks for individual income from tips, overtime and social security.
He also expects a wave of regulatory rollbacks, especially after a recent Supreme Court ruling that gives companies the ability to challenge regulatory overreach.
Yardeni has increased the probability of his ‘Roaring 2020s’ scenario, now giving it a 55% chance, up from 50%. He sees a “1990s-style meltup” as a 25% possibility, while the chance of a “1970s-style geopolitical and/or domestic debt crisis” has fallen from 30% to 20%, he said he.
His reasoning? With Trump back in power, Yardeni said “a faster end to the current geopolitical crises” is possible, especially given recent trends in commodity markets, where oil and gold prices have weakened.
The S&P 500 Index – as tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) – is up nearly 27% this year, similar to its 2021 performance.
Also read: Trump elections increase the chance of a ‘roaring 2020 scenario’, says experienced Wall Street investor: how high can the US stock market rise?
Yardeni is skeptical of the Federal Reserve’s recent interest rate cuts, which he believes are potentially too stimulative.
After a 25 basis point cut on November 7 and a 50 basis point cut in September, Yardeni warns that continued easing could cause a “meltup” in equity markets and possibly reignite inflation.
“If Fed officials continue to cut the FFR, they risk a rebound in price inflation and a stock market meltdown,” the expert said.
With this bullish tailwind in mind, Yardeni has sharply revised his price targets for the S&P 500 upwards. He now sees the index reaching 6,100 at the end of 2024, 7,000 in 2025 and 8,000 in 2026.
He expects the index to cross the 10,000 mark in 2029 – an increase of almost 65% from current levels.
If these forecasts hold, investors could be looking at a decade of stock gains. But as with all market predictions, only time will tell whether “Trump 2.0” will truly usher in Yardeni’s “roaring 2020s.”
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Illustration created using artificial intelligence via Midjourney.
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This article Wall Street Veteran Predicts the S&P 500 Will Hit 10,000 by 2029: ‘Roaring 2020s’ originally appeared on Benzinga.com
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