TSX lower as gold rally takes a breather
Investing.com -- Yardeni Research raised its year-end S&P 500 target back to 7,000, citing the ongoing strength of the U.S. economy and improved market sentiment following President Trump’s resolution of trade tensions.
“We started the year there, but lowered it earlier this year in response to Trump’s Tariff Turmoil,” Yardeni said.
“We began raising our forecast again during the spring, when we concluded that the tariff issue would no longer impact the stock market by the end of the summer. We bet the resilience of the economy would boost S&P 500 earnings. So far, so good.”
Yardeni Research said the “V-shaped stock market rebound since April 9 is discounting the economy’s resilience, which reduces the odds of a recession.”
The analysts described the market as undergoing a “slow-motion meltup,” helped by “the Fed’s rate cut on September 17 and expectations of one or more cuts before the end of the year.”
The firm also raised “the odds of a meltup to 30% from 25%” and maintained a 20% probability for a correction, while lowering its base case for a “sustainable bull market (i.e., without a correction)” to 50% from 55%.
However, Yardeni also said there is now “a bubble in bubble fears,” pointing to a surge in Google searches for “AI bubble.”
The firm expects “another better-than-expected earnings reporting season for Q3,” projecting a 10.7% year-on-year increase in earnings compared with the 6.4% forecast by industry analysts.
“The S&P 500 forward earnings per share rose to another new record high during the week of October 2,” Yardeni added, putting the forward price-to-earnings ratio at 22.7.