MW There's a new top target for the S&P 500 as the 'melt-up' intensifies
By Jamie Chisholm
'We've never seen anything like this,' says Wall Street veteran Yardeni
Hot bar: Activity and gains are picking up in the stock market.
The S&P 500 is now 16.5% above this year's low, having closed Friday at a fresh record. And the bullish calls keep coming.
Wall Street veteran Ed Yardeni is the latest to pump up his S&P 500 target for 2026, raising it from 7,700 to 8,250 as he tracks analysts' rising optimism about corporate profits.
"We've never seen consensus earnings expectations rise so quickly for the current and coming years as they have in recent months," says Yardeni in a note sent Sunday. "The result has been an earnings-led melt-up in the stock market."
Indeed, over at Morgan Stanley, Mike Wilson observes that the current, first-quarter earnings season has seen both median earnings-per-share growth and EPS surprises at four-year highs.
Yardeni is raising his revenue-per-share forecasts by $100 for both 2026 and 2027 to $2,200 and $2,300, respectively. Those figures are nearly the same as the current analyst consensus and are based on an assumption that the U.S. economy will remain resilient.
With profit margins expected by Yardeni to rise to 15% this year and 16.3% next - a bit higher than the current consensus - the Yardeni Research president sees S&P 500 earnings per share climbing to $330 this year and $375 in 2027.
That results in a year-end range for the S&P 500 of between 6,750 and 8,250, assuming a price-to-earnings multiple range of between 18 and 22. Clearly, Yardeni is comfortable using next year's expected earnings and that higher multiple to get to his new 8,250 target for the end of this year.
And yet Yardeni also notes that he's not the most bullish on earnings. Consensus EPS estimates have surged above his 2026 and 2027 targets in recent weeks. They're currently at $336.49 (up 22% from last year) and $386.70 (up 14.9% from the 2026 consensus estimate), respectively.
"The analysts' exuberance is on full display in their consensus estimates of S&P 500 EPS growth for each of this year's four quarters. Again," he says, "we've never seen anything like this."
Source: Yardeni Research
Crucially, Yardeni observes, the percentages of S&P 500 companies with positive year-on-year growth in forward revenue per share and earnings per share continue to increase, reaching 89.6% and 84.6%, respectively, last week. "The recent rapid widening of earnings breadth is bullish," he adds.
This earnings bonanza is all part of what Yardeni has for several years been referring to as the Roaring '20s, and he's raising "the subjective probability" of a continuation of the phenomenon from 60% to 80% "simply by merging it with our melt-up scenario (previously at 20%)."
He's doing so because he reckons that any big market pullback will be a buying opportunity and won't trigger a recession or bear market similar to the bursting of the tech bubble in 2000. "We are sticking with 20% odds of a recession that causes a bear market," he notes.
A risk to Yardeni's optimism is that elevated oil prices because of the Iran war could still hit the global economy. "Another round of fighting could be even more troublesome, as it could result in stagflation." he says. "A more persistent inflation problem would force central banks to raise interest rates." Bond vigilantes, he predicts, "would likely push bond yields higher in this scenario."
Furthermore, many market sectors do look overbought in Yardeni's mind, especially when compared with their 200-day moving averages.
"Nevertheless," he adds, "for now, we are sticking with our 10,000 target for the S&P 500 by the end of 2029. It might arrive ahead of schedule."
The markets
U.S. stock-indices SPX DJIA COMP are little changed at the opening bell Treasury yields BX:TMUBMUSD10Y rise. The dollar index DXY is a tad higher, while gold futures (GC00) are trading around $4,682 an ounce.
Key asset performance Last 5d 1m YTD 1y S&P 500 7398.93 2.33% 8.54% 8.08% 30.73% Nasdaq Composite 26,247.08 4.51% 14.60% 12.93% 46.40% 10-year Treasury 4.389 -5.30 9.60 21.70 -8.50 Gold 4668.9 3.01% -2.05% 7.77% 44.02% Oil 97.58 -7.19% -0.43% 69.97% 57.49% Data: MarketWatch. Treasury yields change expressed in basis points
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The buzz
Oil prices (CL.1) are jumping again after U.S. President Donald Trump said Iran's latest offer to end the war was "totally unacceptable."
China's factory inflation hit a post-COVID high of 2.8% in April compared with a year before as surging global energy costs made an impact. U.S. consumer-price-inflation data will be published on Tuesday.
U.S. economic data due Monday include existing-home sales for April, to be released at 10 a.m. Eastern.
The Treasury will announce the result of a $58 billion auction of 3-year notes at 1 p.m.
After the close, quantum play Rigetti Computing (RGTI) and consumer healthcare company Hims & Hers $(HIMS)$ report results.
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The chart
Jonathan Krinsky, technical guru at BTIG, notes that the S&P 500 on Friday closed more than 7% above its 50-day moving average, yet only 52% of the index's components finished above their own 50-DMAs. In the last 30 years, the S&P 500 has never had less than 55% of its components above the 50-day average when the index itself was at least 7% above, he says. Usually when the S&P 500 was this extended, an average of 86% of components traded above their 50-DMAs.
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May 11, 2026 09:30 ET (13:30 GMT)
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