By Martin Baccardax
One of the market's most-venerated analysts has boosted his price target on the S&P 500 to the highest on Wall Street, forecasting an "earnings-led melt-up" that will power stocks higher alongside a resilient domestic economy.
Ed Yardeni, founder and CEO at Yardeni Research, lifted his year-end price target for the S&P 500 by just over 7%, taking it to 8250 from 7700, a level that suggests gains of more than 11.5% from the benchmark's close Friday of 7398.
Yardeni also thinks the benchmark will hit 10,000 by the end of 2029, adding in a note published Sunday that such an elevated reading might "arrive ahead of schedule" in the new market paradigm.
The push comes amid an historic change in earnings forecasts, for both this year and next, that has lifted stocks more than 16.6% since the market bottomed out on March 30, powered in large part by advances in artificial intelligence and gains for the Magnificent Seven tech giants.
"We've been bullish on earnings but not as bullish as the recent consensus of industry analysts," Yardeni said. "We've never seen consensus earnings expectations rise so quickly for the current and coming years as they have in recent months."
Earnings forecasts have risen more than 22% from the end of last year to around $336.50 a share for the S&P 500, with a near 15% gain in assumptions for 2027.
Yardeni has raised his own forecasts to $330 in 2026 and $375 in 2027.
"We've never seen consensus earnings expectations rise so quickly for the current and coming years as they have in recent months," Yardeni added. "The result has been an earnings-led melt-up in the stock market."
With around 88% of the S&P 500 so far reporting first-quarter earnings, LSEG data suggest collective profits are likely to rise by 28.6% from last year's tally to $681.3 billion. That's a near $83 billion improvement from early forecasts and the strongest quarterly earnings tally in five years.
Tech stocks have powered much of the advance, however, with the three main sectors housing the Mag 7 names driving just over half of the total earnings for the quarter.
That figure is likely to remain consistent over the three months ending in June, as well, with LSEG forecasts suggesting a second-quarter earnings total of around $691.7 billion, marking a 23% gain from last year.
The S&P 500 has risen just over 8.5% so far this year, with a gain of around 13.3% since the start of the second quarter. The closing price for the S&P 500 on Friday was an all-time high, which took the benchmark advance in May to just over 2.6%.
Gains for the tech-focused Nasdaq Composite have been even more impressive, with the benchmark rising some 21.5% since the start of the second quarter, taking its 2026 gain to just over 13.1%.
An index of the so-called Mag 7 tech giants has jumped more than 20% for the quarter, with a monthly advance of just over 5%, while the PHLX semiconductor benchmark has soared more than 55% since the end of March and just over 12% since the start of the month.
Still, Yardeni noted that any pullback in stocks will be a buying opportunity in his "roaring 20s" scenario, and is betting against a "recession or bear market similar to the 1999-2000 Tech Bubble and Tech Wreck."
"Our key assumption is that the economy will remain resilient, and so will earnings," he said. "That's been our mantra since we first started writing about the 'Roaring 2020s' during the summer of 2020.
Risks to the downside, however, remain centered around the U.S. war with Iran, which enters its 11th week on Monday with global crude prices north of $100 a barrel and sentiment tested by another failure in peace talks between Washington and Tehran.
"The shock waves from the war could still hit the global economy," Yardeni said. "Another round of fighting could be even more troublesome, as it could result in stagflation."
A longer, more persistent stretch of elevated inflation likely would push central banks into a more hawkish rate stance, he added, with higher bond yields acting as a headwind to stock performance.
Write to Martin Baccardax at martin.baccardax@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 11, 2026 06:33 ET (10:33 GMT)
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