• Wall Street Veteran Predicts S&P 500 To Hit 10,000 By 2029: 'Roaring 2020s'

    Source: Buzz FX / 12 Nov 2024 15:30:26   America/New_York


    In a bold projection that's sure to grab attention, veteran Wall Street strategist Ed Yardeni is calling for the S&P 500 index to soar to 10,000 by the end of the decade due to a “Trump 2.0” boost after Donald Trump's recent election victory.





    Yardeni, a longtime market analyst, said Trump's return to the White House — alongside a likely Republican-controlled Congress — will bring in a major regime shift that's positive for U.S. stocks, the economy and corporate profits.





    Why Yardeni Sees Trump 2.0 As Game-Changer For Markets





    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's bullish for the economy and stocks," Yardeni said in a note to investors, adding that a business-friendly environment might even help to resolve ongoing geopolitical tensions, as evidenced by recent drops in oil and gold prices.





    Rising Profit Expectations: 2025, 2026 EPS Revised Higher





    To back up his S&P 500 forecast, Yardeni adjusted his earnings expectations for the index's constituent companies.





    He now expects 2025 earnings per share for the S&P 500 to hit $285, up from his previous estimate of $275. His 2026 EPS projection has similarly risen, from $300 to $320.





    While much of the recent growth in S&P 500 earnings has been led by a handful of tech giants — the so-called “Magnificent 7” — Yardeni said he now predicts a broader strength ahead.





    “We expect to see a broadening of the companies and industries for which analysts raise their sights in 2025,” he said.





    Record Profit Margins: Tax Cuts, Deregulation in Focus





    In Yardeni's view, Trump's anticipated policies could push corporate profit margins to new heights. He projects the S&P 500 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 key policy shift Yardeni said he 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 anticipates a wave of regulatory rollbacks, especially after a recent Supreme Court ruling that empowers businesses to challenge regulatory overreach.





    Adjusted Scenario Probabilities: Betting On The ‘Roaring 2020s’





    Yardeni has increased the probability of his “Roaring 2020s” scenario, now assigning 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 dropped from 30% to 20%, he said.





    His reasoning? With Trump back in office, Yardeni said “a sooner end to current geopolitical crises” is possible, especially given recent trends in commodity markets, where oil and gold prices have softened.





    The S&P 500 Index — as tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) — is up nearly 27% year-to-date, on par with the performance seen in 2021.





    Read Also: Trump Election Raises Odds Of ‘Roaring 2020s Scenario,’ Veteran Wall Street Investor Says: How High Could US Stock Market Rise?





    Fed Rate Cuts: Fuel For S&P 500 Meltup?





    Yardeni is skeptical of recent Federal Reserve rate cuts, which he views as potentially over-stimulative.





    Following a 25-basis-point cut Nov. 7 and a 50-basis-point cut in September, Yardeni warns that continued easing could trigger a “meltup” in stocks and potentially rekindle inflation.





    “If Fed officials continue to cut the FFR, they risk a rebound in price inflation rates and a meltup in the stock market,” the expert said.





    New S&P 500 Targets: 6,100 In 2024, 10,000 By 2029





    With these bullish tailwinds in mind, Yardeni revised his S&P 500 price targets sharply upward. He now sees the index reaching 6,100 by the end of 2024, 7,000 in 2025 and 8,000 in 2026.





    By 2029, he expects the index to breach the 10,000 mark — a nearly 65% increase from today's levels.





    If these projections hold, investors could be in for a banner decade of stock gains. But as with any market forecasts, only time will tell if “Trump 2.0” truly ushers in Yardeni's “roaring 2020s.”





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    Illustration created using artificial intelligence via Midjourney.


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