On Wall Street, the “Roaring 2020s” will continue in the year ahead.
That’s at least according veteran strategist Ed Yardeni, who wrote in a note to clients on Monday that he expects the S&P 500 to reach 7,700 by the end of next year.
“The Roaring 2020s remains our base-case scenario. For 2026, we are raising our subjective odds of this prospect from 50% to 60%. We are less concerned about a meltup [or] meltdown scenario now, so we are lowering the odds of that from 30% to 20%. We are keeping our bearish scenario at 20%,” Yardeni wrote in a note.
Yardeni’s forecast assumes earnings and the economy “remain resilient” and adds to this year’s list of stock market outlooks, which have taken on a generally bullish tone.
Like some of his peers on the Street, Yardeni sees earnings growth powering stock prices.
“We expect that S&P 500 companies’ collective earnings per share will increase from $268 this year to $310 next year,” he wrote, which would be a 15.67% increase. In the third quarter, S&P 500 companies grew earnings by 13.4% from the prior year, according to FactSet data.
Yardeni expects economic growth to accelerate in 2026 too, citing Trump’s focus on the affordability crisis, tax benefits from the One Big Beautiful Bill, baby boomers reaching retirement, monetary stimulus driven by a Fed rate cut, and the AI-driven tech boom, which has tech giants planning over $500 billion in capital expenditures.
Wall Street forecasts for the S&P 500 next year have ranged from 7,100 to 8,000, according to data from TKer’s Sam Ro. The index was trading near 6,850 on Monday afternoon.
In a separate note, Yardeni also said he was ending his 15-year Overweight recommendation for tech stocks — including both the Technology (XLK) and Communication Services (XLC) sectors in the S&P 500. In other words, Yardeni is no longer recommending investors hold more of these sectors in their portfolios than the index weight.
“It’s hard to recommend overweighting something that’s already so overweight in the S&P 500 relative to its importance in the economy,” Yardeni told Yahoo Finance in an interview on Monday. Together, these sectors account for about 45% of the index.
“Overweighting these two sectors combined has been justified by their forward earnings share soaring to a record 38.6% of the S&P 500’s forward earnings,” Yardeni wrote. “However, the riskiness of an S&P 500 portfolio has increased along with its concentration in the two sectors.”
