Ed Yardeni, president of Yardeni Research, says the S&P 500 is headed to new all-time highs, and is using the recent selloff in one overlooked sector to build a position he believes offers both income and upside as the broader market continues to recover.
In a new CNBC interview, the veteran Wall Street strategist doubles down on his year-end target for the S&P 500, while predicting that the index will not revisit its 2026 low of 6,316.
“I think [7,700] is achievable. It didn’t look quite as achievable back on March 30th when we made a low on the pullback. But it’s been a remarkable recovery. And I think it’s been because the earnings story is good. And the reason for that is because the economy is amazingly resilient.
I think [6,316] was the low. I don’t think we will test those levels again. It doesn’t come with a money-back guarantee. But I think what’s going to continue to power the market higher is earnings. I think we had a pretty significant sell-off that offered a good opportunity.”
Beyond the broader market call, Yardeni is making a specific sector bet, pointing to the recent weakness in energy stocks as an entry point that income-oriented investors should not overlook.
“We’ve had a bit of a sell-off here in the energy stocks. And I just saw that as an opportunity. If you haven’t been in the sector, the sector is only like 3-4% of the market capitalization of the S&P 500. So when you’re talking about overweight, you’re not talking about a big number, maybe 5-10% of a portfolio. And by the way, a lot of these stocks pay really good dividends.”
Yardeni adds a geopolitical dimension to the trade that gives it an additional layer of conviction, arguing that energy companies involved in rebuilding Middle Eastern infrastructure stand to benefit regardless of how the conflict ultimately resolves.
“Especially the ones that are going to rebuild some of the infrastructure in the Middle East that’s been destroyed or needs repair, they’re going to do quite well for a while. So I kind of view it as a hedge against the possibility that, hey, maybe this war really isn’t over yet.”
As of Thursday’s close, the S&P 500 is trading at 7,108.
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