S&P 500 Target Boosted To 7,700 By Ed Yardeni: Roaring 2020s Odds Jump To 60% - Vanguard S&P 500 ETF (ARCA:VOO)

Core Viewpoint - Ed Yardeni has increased the probability of a productivity-driven boom in U.S. equities from 50% to 60%, projecting a year-end 2026 S&P 500 target of 7,700, indicating a potential 13% rally for the Vanguard S&P 500 ETF [1][4]. Economic Outlook - The U.S. economy is expected to grow between 3% and 3.5% next year, with easing unit labor costs and inflation moving towards the Federal Reserve's 2% target [4]. - Recent fiscal and monetary measures are anticipated to take full effect next year, contributing to economic growth [5]. Demographic Factors - By 2026, Baby Boomers will be aged 62 to 80 and will hold a net worth of $85.4 trillion, with $27.4 trillion in equities and mutual funds, which will support consumption through wealth effects [7]. - Big Tech companies are projected to invest a record $500 billion in capital expenditures in 2026, primarily focused on artificial intelligence infrastructure [7]. Earnings and Valuation Projections - S&P 500 earnings per share are projected to rise from $268 in 2023 to $310 in 2026, with a further increase to $350 in 2027 [8]. - Forward valuation multiples of 18 to 22 suggest an index range of 6,300 to 7,700, with the target set at the high end [8]. Risks to the Outlook - Potential risks include market volatility related to AI valuations, pressures from bond markets, private credit stress, consumer retrenchment, and geopolitical tensions [9][10][11].