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  4. The Dow is set to surge 50% by 2030 as the 'roaring 20s' are alive and well for stocks, market vet says

The Dow is set to surge 50% by 2030 as the 'roaring 20s' are alive and well for stocks, market vet says

Matthew Fox   

The Dow is set to surge 50% by 2030 as the 'roaring 20s' are alive and well for stocks, market vet says
  • With the stock market trading at record highs, the "Roaring 20s" thesis is alive and well.
  • That's according to Ed Yardeni, who expects the Dow and S&P 500 to soar 50% by 2030.

With stocks trading at record highs, the "Roaring 20's" bull thesis remains intact, according to market veteran Ed Yardeni.

Yardeni said in a recent note that his roaring 20s thesis, which is based on the idea that AI will help unleash a productivity boom in the economy, will help drive the stock market 50% higher by 2030, with the Dow Jones Industrial Average and S&P 500 rising to 60,000 and 8,000, respectively.

Yardeni said his 2030 targets are based on continued earnings growth and a simple 6% compounded annual growth rate, which is slightly lower than the stock market's historical average annual return of 7% net of inflation.

"That target could be achieved with a forward P/E of 20 and forward earnings at $400 per share, up 60% from an estimated $250 per share this year. We think that's possible in our Roaring 2020s scenario," Yardeni said.

Forward S&P 500 earnings per share hit $257.20 last week, and analysts currently estimate that S&P 500 EPS will rise to $278 in 2025 and $313 in 2026.

"These estimates suggest that $400 by 2030 is quite possible," Yardeni said.

Helping fuel those earnings, according to Yardeni, is continued consumer resilience, which will be driven by tens of millions of baby boomers that are set to spend their nest egg on all kinds of goods and services over the next few decades.

In an interview with CNBC on Tuesday, Yardeni Research chief market strategist Eric Wallerstein outlined the firm's broad outlook for stocks over the next few years.

"This whole roaring 2020s scenario right now is our highest probability outcome. We attribute a 60% likelihood of that. We have a 20% scenario of a meltup in the stock market, and if the Fed preliminary cuts, we can see that. Meltups are fine you just have to know when to get out," Wallerstein said.

"And then there's that 20% scenario where there's another revival in inflation. But for now we see productivity growth really being a strong driver of real incomes and for the next several years driving the market higher."


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