MW Another strategist chops his S&P 500 target - but for a different reason than the Goldman Sachs reduction

By Steve Goldstein

Yardeni keeps his earnings forecast but says the market won't value those earnings as much

Another day, another S&P 500 target cut.

The reduction by Ed Yardeni, president and chief investment strategist of Yardeni Research, is notable for a few reasons, one being that he was one of the top bulls on Wall Street. (Oppenheimer as of pixel time has the top forecast with a 7,100 target for the S&P 500, which would now require a 27% surge over nine months to be met.)

But also what's unique is how he compared and contrasted his view with that of Goldman Sachs, which this week lowered its S&P 500 target down to 6,200 from 6,500.

"We respect the economists and strategists at Goldman Sachs. That's because they have often agreed with our outlook for the economy and financial markets," he says. "However, it seems to us that they tend to tweak their forecasts faster and more often in response to new data than we do because we tend to stick to our base case scenarios longer."

Yardeni said each approach has its advantages. He notes that sometimes subsequent data ends up supporting the initial narrative; other times the initially reported data gets revised away.

"The latest batch of economic indicators released on Monday, Tuesday, and Wednesday supported our resilient economy scenario with subdued inflation," he says. "Nevertheless, we can't ignore the potential stagflationary impact of the policies that Trump 2.0 is currently implementing haphazardly," pointing both to tariffs that seem less a negotiating tactic than preferred policy, as well as a "shotgun approach to paring the federal workforce"

So Yardeni is sticking with his view that S&P 500 companies will earn a combined $285 per share (far above Goldman's estimate of $262 per share.)

But he is blinking on the valuation multiple, now expecting a range of 18 to 20 instead of 18 to 22.

That takes Yardeni's best-case scenario down to 6,400 from 7,000 (and also his year-end 2026 view down to 7,200 from 8,000). His "worst-case scenario" for the end of 2025 is now down to 5,800.

The markets

The good times didn't last long, with stock-market futures (ES00) (NQ00) steady to lower after a 0.5% gain for the S&P 500 SPX on Wednesday.

   Key asset performance                                                Last       5d      1m       YTD     1y 
   S&P 500                                                              5599.3     -4.16%  -7.48%   -4.80%  8.40% 
   Nasdaq Composite                                                     17,648.45  -4.87%  -10.19%  -8.61%  9.09% 
   10-year Treasury                                                     4.33       5.40    -20.60   -24.60  3.00 
   Gold                                                                 2956.7     1.26%   -0.02%   12.03%  36.47% 
   Oil                                                                  67.33      1.60%   -5.85%   -6.32%  -16.95% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Senate Minority Leader Chuck Schumer said Democrats would reject a House-passed funding bill, which could lead to a government shutdown on Friday night.

Producer price and jobless claims data is due at 8:30 a.m. Eastern. The Fed's quarterly financial accounts of the U.S. report is due at noon. The U.S. Treasury is auctioning $22 billion of 30-year notes.

Intel $(INTC)$ is bringing back a former board member, ex-Cadence Design Systems CEO Lip-Bu Tan, as its chief executive.

Software maker Adobe's $(ADBE)$ outlook missed Wall Street expectations.

UiPath (PATH), a business-automation software platform, blamed macroeconomic uncertainty for a forecast that fell short of analyst expectations.

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The chart

Hedge funds - at least the ones driven by human rather than computer choices - have fallen on hard times of late. So-called fundamental managers who bet on both stocks going up and down (long and short in industry parlance) just had their worst two-week performance in nearly three years, according to Goldman Sachs prime brokerage data. Systematic funds -where investment choices are determined by algorithms - by contrast thrived during this period. Separate data from JPMorgan shows the hedge funds clawed back some of their losses on Tuesday and Wednesday.

Top tickers

Here were the most active stock-market tickers as of 6 a.m. Eastern.

   Ticker  Security name 
   TSLA    Tesla 
   NVDA    Nvidia 
   PLTR    Palantir Technologies 
   INTC    Intel 
   GME     GameStop 
   TSM     Taiwan Semiconductor Manufacturing 
   AAPL    Apple 
   NIO     Nio 
   AMZN    Amazon.com 
   SMCI    Super Micro Computer 

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-Steve Goldstein

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March 13, 2025 06:32 ET (10:32 GMT)

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