Ed Yardeni: S&P Could Hit 5,400 by Year-End

News February 23, 2024 at 09:29 AM

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Yardeni sides with the Fed's outlook for two to three rate cuts this year, defying market predictions of up to seven cuts.
AI stocks, led by Nvidia, are playing a pivotal role in the market's ascent, he says.
Predicting an AI-driven surge in productivity, Yardeni sees technological investments as key to economic growth.

Ed Yardeni, founder of Yardeni Research Inc.

Ed Yardeni, the president of Yardeni Research, expects the S&P 500 to reach 5,400 by year-end.

The economist and investment expert named his target Thursday on CNBC's "Squawk Box," where he also referred to the current market, led by artificial intelligence-related stocks, as "the roaring 2020s."

The S&P 500 and the Dow Jones Industrial Average both hit all-time highs during trading Thursday as Nvidia, the AI market phenom, surged over 16%, hitting a record $785.60, after reporting better-than-expected fourth-quarter earnings. The S&P 500 surpassed 5,094.

Yardeni also agreed with the Federal Reserve's signal that it would cut interest rates this year only two or three times, not the five to seven that many in the market had expected.

"Why mess with success? Inflation's coming down, the economy's strong, the labor market's doing well, and now we've got the roaring 2020s in the stock market, led by Nvidia," he said.

"There's absolutely no rush to cut interest rates," Yardeni said, adding that the Fed not only tightened but normalized interest rates last year.

"Interest rates are back to normal. The economy lived with these rates before, I think it can live with them again. I think it's actually healthy for the economy to have an interest rate that is good for investors in terms of risk-free investing and is good in terms of allocating capital," Yardeni said.

As far as the stock market is concerned, he said, "I like slow, civilized bull markets, I don't like stampedes. The problem with meltups is that by definition they're followed by meltdowns. But for now it's roaring 2020s, as I said. It all really started on Nov. 30, 2022, when OpenAI introduced ChatGPT."

A "tremendous amount of money is being thrown at (AI), and I think some of that is going to pay off in better productivity," he said.

Image: Bloomberg

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