Veteran Wall Street strategist Ed Yardeni is stepping back, announcing ‘Mission accomplished’ regarding his year-end target for the S&P 500. This declaration comes after the index reached a record high of 6901 on December 11. According to Yardeni, this figure is ‘close enough’ to his 7000 target, suggesting it might represent the peak for the year.
As of Thursday in New York, the S&P 500 was trading at 6778.41, marking a 0.9 per cent increase for the day. While Yardeni doesn’t dismiss the possibility of a Santa Claus rally before year’s end, he believes it’s unlikely if the S&P 500 continues its shift from the ‘magnificent seven’ tech stocks toward the remaining ‘impressive 493’ companies. This rotation, he anticipates, will extend into 2026.
Yardeni highlights that the mega-cap technology companies have experienced rapid growth, with their market capitalization doubling to $US20 trillion in the past two years. He suggests investors should now focus on the broader S&P 500. His reasoning is that increased competition by 2026 will likely decelerate the earnings growth of the ‘magnificent seven’.
Conversely, Yardeni expects that the AI services provided by these tech giants will enhance the productivity and earnings growth of the ‘impressive 493’. This aligns with his ‘roaring 2020s’ scenario, signalling a potential shift in market dynamics and investment focus. Yardeni Research, Inc. is an investment strategy firm providing economic and stock-market analysis. They publish a variety of reports and research materials for institutional investors.
