Wall Street veteran Yardeni insists that the US stock market has bottomed out: Investors are becoming less concerned about the war and returning to fundamentals.

Recently, as the expectation of a ceasefire between the United States and Iran heats up, the market sentiment triggered by the war has undergone a dramatic reversal. Global markets have seen a series of positive reactions, with the MSCI Global Index regaining all lost ground during the war and hitting a historical high. The Nasdaq 100 Index has recorded ten consecutive gains, while the US dollar has faced its longest continuous decline since 2006. In response to this, Ed Yardeni, President of Yardeni Research, once again made his voice heard, analyzing the situation and concluding that "investors are no longer focusing on the war, but on the fundamentals." In this V-shaped reversal driven by easing geopolitical risks, experienced strategist Ed Yardeni pointed out that the market is learning to "coexist with the Iran war" and maintains the judgment that the S&P 500 Index hit bottom on March 30. This means that the market has moved away from the initial panic mode, and geopolitical concerns are no longer the dominating factor. Market signals are becoming clearer, and investors are beginning to refocus on company earnings and profitability, indicating a return to risk appetite. From cautious optimism in the early stages of the war to a decisive increase in the probability of a collapse in early March, followed by a precise confirmation of the market bottom in early April, this Wall Street veteran's recent assessments of market trends have once again become a key point in the current market bull-bear debate. Yardeni: From "caution" to "confirming the bottom" to "moving beyond the war" The US-Iran war that began at the end of February once pushed global markets to the brink of crisis. Over the course of a month, Yardeni's market judgments went through a complete cycle of "initial concern, then confirmation." At the beginning of the conflict, when oil prices were most severely impacted, in early March, he raised the probability of a US stock market collapse by the end of 2026 from 20% to 35%. At the same time, he sharply reduced the probability of a market melt-up (a rise driven primarily by investor enthusiasm rather than fundamentals) from 20% to just 5%, and pointed out a 15% chance of a "replay of 1970s-style stagflation." However, he was not entirely pessimistic and maintained his baseline scenario of a roaring 2020s until the end of 2026 with a probability of 60%. By early April, the situation became clearer. Yardeni stated in an interview that the S&P 500 Index had hit bottom on March 30 and maintained his target of 7,700 points by the end of 2026 unchanged. He pointed out that the recent 9% pullback in the S&P 500 Index was in line with his earlier prediction of a correction range of 10% to 15%, enhancing his belief that "the hardest times for investors are already behind us." This assessment came nearly a week before Trump officially called for a ceasefire in early April, triggering a global stock market rally. In mid-April, Yardeni further explained his optimistic assessment in an interview. He emphasized, "History shows that geopolitical crises are often excellent buying opportunities." At the same time, he noted that since the outbreak of the pandemic, the US economy has shown resilience in facing multiple stresses such as supply chain disruptions, rising inflation, and increasing interest rates. He expects that after experiencing an economic slowdown due to weather factors, US economic growth will rebound in the spring, highlighting strong bank profits and good consumer conditions. Recently, Wall Street banks have been releasing their earnings reports with impressive results, and bank executives have been sending signals to investors that there is "no need to worry." This Wall Street veteran, who coined the term "bond vigilante," concluded, "The resilience of the economy fully demonstrates that our capital markets can absorb a lot of pressure, and economic activities will not experience a significant decline." Tactical adjustment in leading tech stocks, remaining optimistic about the economy in the long term As tensions eased in April, Yardeni made a tactical adjustment in his stance on tech stocks. With valuations falling to more attractive levels, tech stocks regained their appeal. He pointed out that the price-to-earnings ratio of the "Tech Big Seven" had dropped significantly from 31 times to a low of 22 times in recent trading days, making tech stocks relatively cheaper. Therefore, he adjusted his holdings in these leading tech stocks from "reducing" to "neutral to the market." This adjustment signaled Yardeni's tactical return to these tech giants for the first time since he made the strategic decision to reduce exposure to them in December of last year. Over the past 15 years, Yardeni has been a strong advocate for being overweight in the information technology and communication services sectors, earning him a great deal of market reputation. However, in December 2025, Yardeni made a significant strategic shift, ending his 15-year overweight recommendation for the "Tech Big Seven." In his outlook report released at the time, he pointed out that these giants accounted for nearly 45% of the S&P 500 market value, posing a high and unsustainable concentration risk. He named the 493 companies in the S&P 500 excluding the Big Seven as the "Impressive 493" and advised investors to increase exposure to the financial, industrial, and healthcare sectors. Yardeni believes that while artificial intelligence is a long-term trend, there may be a disconnect between the massive AI investments of tech giants and their profitability. This cautious approach contrasts sharply with some of the exuberant sentiment in the current market, making his swift tactical decision to increase exposure to tech stocks at reasonable valuations particularly astute. In the long run, Yardeni maintains an optimistic attitude towards the market. He defines the current economic environment as the "roaring 2020s," foreseeing strong and sustainable growth for the US economy driven by rapid productivity growth. He predicted that with earnings per share (EPS) expected to reach $350 in 2027, the S&P 500 index could climb to 7,700 points by the end of 2026, eventually challenging the 10,000-point milestone at the end of this decade. Even when he raised the probability of a collapse to 35% in early March, he emphasized that the likelihood of the "roaring 2020s" continuing was as high as 85%, with only a 15% chance of a replay of the stagflation of the 1970s. Bullish versus bearish: Can Yardeni's optimism withstand scrutiny? While Yardeni's optimism resonates in the market, not all top Wall Street strategists share this view. In a global fund manager survey in mid-April, geopolitical conflicts have been viewed as the biggest tail risk for the second consecutive month by fund managers. Michael Hartnett, Chief Investment Strategist at Bank of America, pointed out that the current market positioning indicators are "far from the super bear market levels seen in recent major lows." His team compared four historical lows: the 2025 tariff shock, Russia-Ukraine war, COVID-19 meltdown, and the 2011 US debt downgrade, and found that each time the market indicators were more extremely pessimistic than they are currently. Hartnett's conclusion is that true bottoms often come after real capitulation, a moment that has not yet arrived. However, Goldman Sachs and Morgan Stanley are on Yardeni's side. Goldman Sachs strategists forecast that by the end of 2026, driven by sustained corporate earnings expansions and moderate economic growth, the S&P 500 Index could rise to 7,600 points. The team of Morgan Stanley's Chief Investment Officer Michael Wilson points out that the acceleration of corporate earnings growth is providing protection for the S&P 500 Index. Yardeni himself is not unaware of the potential risks in the market. He once said an intriguing statement: "Pessimism is now outdated." He even admitted, "There are too many bullish people, which makes me a bit uneasy." The current market is in a phase of rapid clearance of geopolitical risk premiums, but the future trend heavily depends on substantial progress in US-Iran negotiations. In the short term, there are multiple variables in the US-Iran negotiations. At this point, the divergence between the optimists represented by Yardeni and the caution represented by Hartnett may reflect different assessments of the degree of clearing of the "geopolitical risk premium" in the market. However, risks should not be overlooked. If negotiations collapse before April 22, risk sentiment could quickly reverse, and the structural impact of continued closure of the Strait of Hormuz on global energy supply has not been fully resolved, so there is still a need to be vigilant against the risk of a pullback resulting from the "good news running out" or a reversal in negotiations.