One of Wall Street's most seasoned strategists is doubling down on his optimism for U.S. equities, raising the probability of a productivity-driven boom through the end of the decade.
On Monday, Ed Yardeni lifted the odds of his Roaring 2020s scenario from 50% to 60%, with earnings strength and firmer valuations supporting a year-end 2026 S&P 500 target of 7,700.
That suggests a 13% rally for the Vanguard S&P 500 ETF‘s (NYSE:VOO) current levels.
“The coming new year looks like another good one for stock investors,” Yardeni said in his latest note.
Why Yardeni Sees More Room To Run For The Stock Market
Long known for its "Roaring 2020s" thesis, Yardeni Research now assigns a 60% probability to a bullish scenario that sees the S&P 500 reaching 10,000 points by the end of the decade.
At the center of the call is stronger-than-expected productivity growth. Yardeni expects the U.S. economy to expand between 3% and 3.5% next year, with unit labor costs easing and inflation dropping back toward the Federal Reserve's 2% target.
According to the expert, recent fiscal and monetary measures will begin to take full effect next year.
President Donald Trump‘s One Big Beautiful Bill Act, passed in July 2025, is expected to deliver retroactive tax cuts and new deductions set to land as lump-sum refunds during the 2026 tax season, while recent Fed rate cuts are expected to amplify both consumer spending and business investment.
Demographic also plays an important role. Yardeni highlights that Baby Boomers will be 62 to 80 years old in 2026 and hold $85.4 trillion in net worth. They own $27.4 trillion in equities and mutual funds, which supports consumption through wealth effects.
At the same time, Big Tech is expected to pour a record $500 billion into capital expenditures in 2026, with the bulk of that spending—led by the Magnificent Seven—targeted at building out artificial intelligence infrastructure.
The overall macro backdrop looks supportive for equities. Yardeni sees S&P 500 earnings per share rising from $268 this year to $310 in 2026, with a projection of $350 for 2027. Forward valuation multiples of 18 to 22 imply an index range of 6,300 to 7,700, and his target is the high end.
What Could Derail This Bullish Outlook?
Yardeni lays out six risks that could blow the Roaring 2020s off course. AI valuations have already sparked market volatility, and he acknowledges that widespread questions like "Is AI a bubble?" could suppress multiples or trigger a downturn.
Bond markets are another pressure point. He notes that the Bond Vigilantes are "instigating sovereign debt crises in Japan and the United Kingdom," which could spill into U.S. yields.
Private credit stress is a concern, though Yardeni says Fed easing helps borrowers refinance and creditors understand the risks.
Consumer retrenchment threatens the outlook amid slowing job gains. Yardeni notes confidence is depressed by the affordability crisis.
“Alternative scenarios include a bear case, triggered by a recession or recession fears (20% odds), and a stock market meltdown/meltup (trimmed to 20%),” Yardeni wrote.
Last but not least, geopolitical tensions still loom large. Yardeni warns that if "China invades Taiwan or Russia invades Europe, all bets are off."
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