Yardeni Research Raises S&P 500 Year-End Target to 5,800 Amid Bullish Momentum and Rate-Cut Euphoria
Yardeni Research has increased its year-end target for the S&P 500 to 5,800 from 5,400, driven by an accelerated discounting of their "Roaring 2020s" scenario. The firm is bullish on the stock market, citing momentum and bullish sentiment as key drivers.
Since June, the market has experienced a "slow-motion meltup," supported by weaker economic indicators and increasing odds of Federal Reserve rate cuts. The federal funds rate futures market is signaling potential cuts starting in September, as suggested by Fed Chair Jerome Powell's testimony.
Yardeni Research believes the rate cuts are unnecessary given the current economic strength, with the Atlanta Fed's GDPNow model estimating Q2 real GDP growth at 2.0%. Despite this, rate cuts could drive the market higher, fueled by the $6.15 trillion in money market mutual funds.
The bull market, led by AI stocks, is expected to broaden further with better-than-expected Q2 earnings and increased AI adoption. Comparisons to the late 1990s melt-up are made, with Yardeni highlighting stronger earnings support this time.
Despite elevated bullishness, Yardeni suggests this time might be different due to substantial money parked in short-term instruments. Overall, Yardeni Research remains optimistic, targeting 8,000 for the S&P 500 by the end of the decade.
In summary, Yardeni Research's bullish outlook on the stock market is supported by momentum, rate-cut expectations, and strong earnings. Investors should monitor economic indicators, Fed announcements, and earnings reports to make informed investment decisions in this evolving market environment.