Market expert Ed Yardeni forecasts that the bullish trend in the stock market, fueled by Trump's victory, will continue. Yardeni reaffirmed his projection that the S&P 500 (SPX, Financial) will reach 10,000 points by the end of the 2020s, representing a 66% increase from current levels. He also adjusted his year-end 2024 target to 6,100 points, indicating a potential rise of 1.8%.
Yardeni highlighted the potential for a "Roaring Twenties" scenario, reminiscent of the 1920s economic boom in the West, especially after Trump's win and the possibility of a Republican-controlled Congress. He believes the pro-business policies introduced by the incoming administration could continue to spark investor enthusiasm, contributing to the upward momentum seen last week.
The "Trump trade" has led to record highs for the S&P 500 (SPX, Financial), Nasdaq, and Dow. Investors anticipate more business-friendly measures during Trump's second term, including regulatory rollbacks and tax reductions, expected to boost corporate profits.
Yardeni expects industry analysts to revise their earnings forecasts for the S&P 500 (SPX, Financial) upwards. He adjusted his 2025 earnings per share estimate from $275 to $285 and his 2026 forecast from $300 to $320, based on the assumption that Trump would reduce corporate taxes from 21% to 15%.
He also noted that if conflicts in Ukraine, Russia, and the Middle East are resolved sooner than anticipated, market optimism could further increase. However, Yardeni cautioned that if stock prices rise too rapidly, excessive optimism on Wall Street and overvaluation of some major stocks could set the stage for a sharp market correction.
While he does not foresee a significant risk of a bear market in the current rally, Yardeni does anticipate a correction before the 2020s conclude.
