Veteran market strategist Ed Yardeni remains optimistic about U.S. stocks over the long haul but is waving a yellow flag for the next few weeks.
He wouldn't be surprised to see a "swoon in June." After the market bounced hard off its March lows and climbed sharply through April and May, he thinks a short pause or pullback would be perfectly normal.
His long-term targets remain bullish. His key assumption is that the economy will remain resilient, and so will earnings. He is calling for the S&P 500 to hit 8,250 by year-end — the highest forecast on Wall Street — and 10,000 by the end of the decade. He frames this as a "Roaring 2020s" era, powered by technological innovation and the AI boom, much like the economic boom of a century ago.
Yardeni says this bull market isn't being driven by FOMO (fear of missing out) but by what he calls FEMO — "fabulous earnings momentum." Upward revisions to consensus 2026 and 2027 earnings estimates have been impressive. Corporate earnings have been strong, revenues are growing, profit margins are expanding, and businesses are spending heavily on capital investment, particularly in AI. And the breadth of companies with earnings growth is still improving. He sees recession odds at just 19% for 2026, the lowest reading of the year.
That said, he's watching several risks closely:
- Oil prices and the Middle East conflict. The U.S.-Iran war has kept the Strait of Hormuz under stress, and executives at Exxon and Chevron have warned that global oil inventories are dangerously low. Brent crude peaked above $126 per barrel during the conflict, and some forecasts point to $150 or higher if the war escalates again. Yardeni worries this could trigger a 1970s-style stagflation scenario, though he believes the U.S. will ultimately force Iran to accept peace terms.
- Interest rates. Yardeni — who famously coined the term "bond vigilantes" — expects the Federal Reserve to drop its current easing bias and shift toward tightening at its June meeting, potentially followed by a rate hike as early as July. This would catch many market participants off guard, since the broader consensus doesn't expect a hike until much later in the year.
- Mega IPOs. He's keeping an eye on the anticipated public offerings from SpaceX, OpenAI, and Anthropic, which could collectively add nearly $4 trillion in market capitalization. If their valuations disappoint, it could rattle markets.
- Stretched valuations and sentiment. The S&P 500's forward price-to-earnings ratio is historically elevated, and over half of consumers now expect stocks to be higher in a year — well above the long-run average. From a contrarian standpoint, Yardeni sees that kind of bullishness as a warning sign.
Despite all of this, he views any near-term pullback as a buying opportunity rather than the start of something more serious. The fundamentals, he argues, remain solidly intact — and the AI-driven bull market still has a long runway ahead.
Michael Holden,
Founding Partner, Elevate Wealth Management
Portfolio Manager, Quintessence Wealth
