Benzinga - by Piero Cingari, Benzinga Staff Writer.
The Dow Jones Industrial Average closed above 40,000 for the first time ever at the end of last week. Wall Street veteran analyst and investor, Ed Yardeni forecasts that this is just the beginning, projecting the Dow to reach 60,000 by 2030.
Concurrently, Yardeni anticipates the S&P 500 will climb to 8,000, or about 60% from current levels, driven by substantial earnings growth and favorable market conditions.
“We think that’s possible in our Roaring 2020s scenario,” Yardeni stated. According to the expert, this scenario has a 60% probability of unfolding, compared to a 20% chance of either a 1990s-style market melt-up or a 1970s-style stagflationary environment.
“The Roaring 2020s started in the stock market on Nov. 30, 2022. That's when OpenAI launched ChatGPT,” Yardeni highlighted.
The Dow Jones, as tracked by the SPDR Dow Jones Industrial Average ETF (NYSE:DIA) has experienced a remarkable rally in the current bull market, increasing nearly 25% since its October 2023 low and 41% since its October 2022 low.
The S&P 500, as closely followed by the SPDR S&P 500 ETF Trust (NYSE:SPY), has also performed exceptionally well, rising 29% since October 2023 and 52% since October 2022.
Chart: Percentage Change Of S&P 500 And Dow Jones Since October 2022 Low
Read also: Why Veteran Wall Street Investor Believes We’re Still In A Bull Market
Earnings Growth Fuels Optimism Yardeni’s bullish outlook is underpinned by robust earnings projections. The S&P 500 is expected to achieve forward earnings per share (EPS) of $400 by 2030, a significant increase from the current estimate of $250 per share. This implies a forward price-to-earnings (P/E) ratio of 20, suggesting that the market could sustain its upward trajectory.
The almost concluded first-quarter earnings season for 2024 exceeded initial forecasts. Analysts had predicted a modest year-over-year EPS increase of 1.2% for the S&P 500.
However, Yardeni highlighted the actual growth rate was a much stronger 6.3%, reflecting the resilience and profitability of major corporations.
S&P 500 forward earnings, which represent a time-weighted average of consensus estimates for the current and following year, reached a new peak of $257.20 during the week of May 15. Analysts now estimate that EPS will be $244 for 2024, $278 for 2025, and $313 for 2026.
“These estimates suggest that $400 by 2030 is quite possible,” Yardeni stated.
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Image created using artificial intelligence via Midjourney.
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