S&P 500 Reaching 8,000 and DJIA Hitting 60,000: Yardeni Presents the Roadmap

A recent report from Yardeni Research indicates that both the S&P 500 and the Dow Jones Industrial Average (DJIA) are set for substantial growth by the end of the decade. Analysts at Yardeni project that the DJIA could reach 60,000, while the S&P 500 might exceed 8,000 by 2030.

The primary factor driving the anticipated growth of the S&P 500 is the earnings per share (EPS), which has been steadily increasing at a rate of 6-7% annually since the 1950s. In Yardeni’s “Roaring 2020s” scenario, they predict that S&P 500 EPS could double to $400 by the decade’s end, with a price-to-earnings (P/E) ratio of 20, which would push the index beyond the 8,000 threshold.

Yardeni notes that the S&P 500 continues to rise alongside its reported earnings per share. While the index’s trailing P/E ratio is relatively high, it has been higher in the past and typically tends to dip during recessions before rebounding.

Despite ongoing geopolitical tensions, Yardeni maintains a positive outlook. Historically, periods of geopolitical crisis have often presented buying opportunities, although the stock market faced challenges during the “crises-prone 1970s.”

The firm advises investors to avoid allowing political views to dictate investment decisions, asserting that the stock market tends to rise irrespective of the political party in power and the level of federal government debt.

Looking at historical performance, Yardeni notes that the S&P 500 has averaged a 7.3% annual increase since 1928, with dividends enhancing total returns. The firm emphasizes that the market has more up years than down years, with the months of February, May, and September typically seeing weaker performance.

In conclusion, Yardeni highlights that the duration of bull markets can vary, however, they generally end before recessions and tend to resume when an economic recovery appears likely.