Veteran analyst drops a surprise verdict on S&P 500

The U.S. stock market has been choppy, to say the least, swinging back and forth as President Donald Trump sends mixed signals on the Iran war.

However, veteran market strategist Ed Yardeni isn’t waiting for any more confirmation for the S&P 500.

In an appearance on CNBC’s “Closing Bell,” Yardeni said that Monday, March 30, marked the bottom, and he’s sticking with his year-end S&P 500 target of 7,700. 

That’s more than a 17% upside from current levels, a call bordering on audacious, given the geopolitical fog blanketing global markets.

The S&P 500 closed Thursday, April 2, at 6,582.69, up a modest 0.11% after a wild session that saw the benchmark index swing from a 1.5% loss to a brief gain, according to Yahoo Finance. For the week, the index still managed a 3.4% rally.

It’s the best weekly performance since November, breaking a five-week losing streak, the longest such run since 2022.

Who is Ed Yardeni?

Yardeni, a bona fide Wall Street legend, is far from a random CNBC talking head.

For some color, before founding and spearheading Yardeni Research in 2007, he served as chief investment strategist for Oak Associates, Prudential Equity Group, and Deutsche Bank’s U.S. equities division. 

He also served as chief economist for CJ Lawrence, Prudential-Bache Securities, and EF Hutton.

More Wall Street

• Billionaire Dalio sends 2-words on Fed pick Warsh
• Top analyst bets these stocks will boost your portfolio in 2026
• Bank of America sends quiet warning to stock market investors

He taught at Columbia University’s Graduate School of Business, holding positions at the Federal Reserve Bank of New York, the Federal Reserve Board of Governors, and the U.S. Treasury Department.

He’s also known for coining the “Fed model,” a theory of stock valuation that effectively compares the stock market’s forward earnings yield to the nominal yield on long-term government bonds. 

Given his Wall Street chops, he’s frequently quoted in The Wall Street Journal, the Financial Times, The New York Times, and other major financial publications.

Key takeaways from Yardeni’s call:

• Year-end S&P 500 target: 7,700, implying double-digit upside from the recent closing price. 
• Correction forecast: Had been expecting a 10% to 15% pullback, so the recent 9% drop fits his framework.
• Geopolitical view: Iran developments provided the “exit ramp” markets needed.
• Oil stance: The U.S. benefits as an energy exporter, so higher prices aren’t a deal-breaker.
• Tech valuations: The Magnificent 7’s P/E ratio fell from 31x to about 22x post-pullback, making tech more attractive.

A 9% pullback that fits the script

Yardeni’s confidence isn’t coming out of nowhere.

The recent 9% drop in the S&P 500 aligned almost perfectly with the 10% to 15% correction he had been forecasting for months. In his opinion, it was essentially the reset the stock market needed.

What changed the mood, according to him, was geopolitics. He believes recent developments around Iran gave markets the clarity they were missing, easing fears of a prolonged conflict. “Geopolitical developments have provided the exit ramp that markets were desperately seeking,” he told CNBC.

Related: Veteran analyst sends message to Tesla investors after Q1 miss

Even with oil prices pushing toward $110 per barrel, Yardeni isn’t flinching.

He pointed out that the U.S., as a net exporter of oil and gas, actually benefits from higher prices, a luxury most other developed economies don’t share. 

“One way or another, the oil is going to come out of the Persian Gulf,” he said, citing ongoing Iran-Oman talks to coordinate tanker traffic through the Strait of Hormuz.

The VIX isn’t buying what Yardeni is selling

This is where the real figures get interesting. The Cboe Volatility Index, which Wall Street calls its fear gauge, remains stuck in the mid-20s and has recently traded in the 24-27 range. It’s not panic territory, but it’s not close to being calm, either.

Otherwise, in more stable market environments, the VIX will usually settle in the mid-to-high teens. The fact that the readings are high, about 25, shows investors are pricing in significant uncertainty in the next 30 days.

For perspective, the VIX rose above 80 during the 2008 financial crisis, and after the 2020 Covid sell-off, declined sharply as markets returned to normal. Sustainable rallies did not become established until, in the 2022 drawdown alone, volatility trended lower to the low-20s and the high-teens. 

However, technical strategists at Bank of America reported that after the VIX soars above 45 for the first time, the S&P 500 usually faces a four- to eight-week stretch of difficulty. 

The required eight-week rise in this benchmark index is only 40%, with a mean return of only 0.95%. That implies patience is in order, even when the fear gauge indicates an extreme level.

S&P 500 year-end closes

• 2020: 3,756.07
• 2021: 4,766.18
• 2022: 3,839.50
• 2023: 4,769.83
• 2024: 5,906.94
• 2025: 6,845.50
  Source: Yahoo Finance

What’s really happening under the hood

The S&P 500 closed the first quarter down about 5%, a rough start after three consecutive years of double-digit gains. 

The 2026 scorecard looks nothing like the 2025 scorecard. 

Last year, every S&P 500 sector finished in the black. 

Energy was the “worst” performer, up 8.7%; that’s how broad-based the rally was. This year, five of 11 sectors are in the red, and the winners are almost entirely driven by either the Middle East war or a flight to defensive, yield-oriented names.

S&P 500 sector 2026 YTD return

• Energy (XLE) +35.7%
• Materials (XLB) +9.7%
• Utilities (XLU) +6.7%
• Consumer Staples (XLP) +5.0%
• Industrials (XLI) +3.6%
• Real Estate (XLRE) +1.2%
• Health Care (XLV) -5.7%
• Information Technology (XLK) -8.6%
• Consumer Discretionary (XLY) -9.1%
• Financials (XLF) -10.2%
  Source: Best Investments

Where Yardeni stands on tech

Yardeni has been skeptical of stocks of late and recently removed his 15-year overweight rating on U.S. tech stocks.

Therefore, he believed diversification was in order, proposing that investors branch out into financials, industrials, and health care.

But there’s the twist.

He indicated that the Magnificent 7’s price-to-earnings ratios had fallen from about 31 times earnings to nearer 22, which led him to be comfortable returning to a market-weight position in the sector.

Related: Morgan Stanley has a blunt message for gold investors