Strong earnings and a resilient U.S. economy should continue to fuel the stock market, despite concerns over high valuations and uncertain U.S. tariff policies, Yardeni Research President Ed Yardeni said Tuesday.
“It’s really all about the resilience of the economy, the strength of the economy, which means that earnings are going to continue to be strong and that’s what I think is driving the market, I think that’s what’s holding up the market right now,” Yardeni said on CNBC's "Squawk Box." The economy just illustrated in the past three years it could withstand tightening monetary policy, he added, noting that while others expected a recession at the time, he didn't.
“Nobody seems to have learned from the experience of the past three years that this economy is really resilient and I think it can take some chaos and policymaking and tariff-making," he said.
Productivity has been making a comeback and continues to do so, Yardeni said, noting ongoing technological advances, including artificial intelligence. Putting all that together means a market "looking solidly forward." He has projected the S&P 500 will hit 7,000 this year, roughly a 15% increase from its current level.
Valuations are stretched, but the economy is expanding, fueled by great earnings, which suggests they can return to more average levels without a big downturn, according to Yardeni. The last three years suggest there won't be a recession before the decade ends, he added. “It may turn out to be the roaring 2020s after all.”
Photo: Bloomberg
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.