Yardeni Research, led by Ed Yardeni, has lowered its year-end S&P 500 target to 7,900 from 8,400. This adjustment reflects an increase in the subjective odds of a bearish outcome for the market from 20% to 30%, though the firm still anticipates economic growth without a recession through the end of the decade. The primary reasons for this revision are the recent backup in bond yields, with the 10-year US Treasury yield approaching 5.00%, and re-escalating geopolitical tensions in the Middle East pushing oil prices above $100 a barrel.
The firm also moved its S&P 500 target of 8,400 to mid-2027, but reaffirmed its ambitious end-of-decade target of 10,000. Yardeni Research lowered its estimate for the forward P/E of the S&P 500 at year-end from 19.8 to 18.6, while keeping its 2027 EPS target at $425. Despite the near-term concerns, the firm's 'Roaring 2020s' base-case scenario odds were only slightly reduced from 80% to 70%.
Other analysts have offered differing views. Tom Lee of Fundstrat remains optimistic, suggesting the S&P 500 could easily surpass 8,200 by year-end, driven by technology stocks and the "Magnificent Seven." In contrast, Wells Fargo recently trimmed its S&P 500 year-end target to 7,700 from 7,950, citing limited catalysts and rising political and sector-specific risks. Goldman Sachs Research also noted that stocks historically struggle during the initial phases of Fed hiking cycles, averaging a 2% decline over three months after past cycles began.
