Dow To Reach 60,000, S&P 500 To Hit 8,000 By 2030 In Wall Street Veteran's 'Roaring 2020s Scenario' (2024)
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.
“TheRoaring2020s 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.
Yardeni Research's chief investment strategist, Ed Yardeni, told clients in a note that the Dow Jones Industrial Average is on track for a 50% rise to 60,000 by 2030, and the S&P 500 could climb to 8,000, thanks to earnings.
The Dow includes 30 large, well-established U.S. companies from various industries. The Nasdaq indexes focus heavily on technology companies but also include other sectors. The S&P 500 includes 500 large U.S. companies from all major industries, providing a broad market representation.
The largest single-day percentage declines for the S&P 500 and Dow Jones Industrial Average both occurred on Oct.19, 1987 with the S&P 500 falling by 20.5 percent and the Dow falling by 22.6 percent. Two of the four largest percentage declines for the Dow occurred on consecutive days — Oct. 28 and 29 in 1929.
How has S&P 500 performed? A1. S&P 500 dropped 1.7 per cent to close out its worst week since March 2023. S&P 500 remains just 4.6 per cent below its all-time high set in July.
On April 12, 1994, the Dow Jones Industrial Average closed at 3,681.69. Over the trailing-30-year period, this widely followed index has increased at an annualized rate of 8.09%! If this superior rate of gains were to persist, the Dow could reach 50,000 before the calendar changes to 2028.
Dow Jones price prediction for the next 5 years: In 2030, projections and trends show that the Dow would reach 50,000, according to a mathematical forecasted model successfully applied in the past.
But there is one main distinction between these two indexes: The S&P 500 has 500 of the largest companies, which is why some investors believe it provides a more accurate picture of the economy. The Dow Jones, on the other hand, is composed of 30 blue-chip companies.
The S&P 500 is a stock market index maintained by S&P Dow Jones Indices. It comprises 503 common stocks which are issued by 500 large-cap companies traded on American stock exchanges (including the 30 companies that compose the Dow Jones Industrial Average).
Dow plunges more than 1,000 points amid fears of U.S. economic slowdown. Stocks in the U.S. plunged for a third consecutive trading day, with the Dow Jones Industrial Average tumbling more than 1,000 points amid growing fears of an economic downturn sparked by a slowdown in hiring and consumer spending.
In almost every case, the S&P 500 has bottomed out roughly four months before the end of a recession. The index typically hits a high seven months before the start of a recession. During the last four recessions since 1990, the S&P 500 declined an average of 8.8%, according to data from CFRA Research.
Looking at the S&P 500 for the years 1993 to mid-2023, the average stock market return for the last 30 years is 9.90% (7.22% when adjusted for inflation).
By the end of 2023, the previous high, registered in January 2022, had been surpassed, and the 37,000 mark had been breached. The Dow then climbed above 38,000 in January 2024.1 The index reached a new all-time high on May 16, 2024, surpassing 40,000 for the first time.
The momentum from the Covid lows carried through to 2021, with the Dow breaking above 35,000. However, the good times wouldn't last for much longer, as a bear market knocked the Dow all the way down to 28,660.51 before recovering. Since reaching that low, the Dow has surged 40%.
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