Wall Street leader Adney “defected”: after raising expectations for a month, the S&P 500 target was lowered to 7,900 points to warn of rising downside risks

The Zhitong Finance App learned that Ed Yardeni (Ed Yardeni), one of the biggest bulls on Wall Street, has drastically lowered the S&P 500 target at the end of the year after raising expectations for just one month, because the downside risk of the economy will rise in the next three to six months. The president and chief investment strategist of Yardeni Research Inc. lowered S&P's target for the end of the year 500 from 8,400 points to 7,900 points, while 8,400 points was still Wall Street's highest estimate as of last month. The new target means there is 4.1% room to rise from the index's closing level on Tuesday, while also being in the middle of the market survey's more than 20 strategists.

“In view of the recent recovery in bond yields, we lowered the S&P 500 forward price-earnings ratio forecast from 19.8 times to 18.6 times, so our target for the end of the year was reduced from 8,400 points to 7,900 points,” Adney wrote in a report to clients.

The veteran strategist raised the S&P 500 target from 8,250 points to 8,400 points in August. At the time, driven by “excellent” profit momentum, the target hit his highest level on Wall Street.

Adney is the second strategist to lower S&P 500 expectations this week. As the midterm election year draws to a close, analysts are increasingly skeptical. Wells Fargo's Ohsung Kwon lowered the target from 7,950 points to 7,700 points, saying that the decade-long profit growth cycle will eventually slow down, while risks in the technology sector are rising.

However, others raised their forecasts this week, including Bank of America's Savita Subramanian and Tallbacken Capital Advisors' Michael Purves, whose 8,500 point target is currently the highest on Wall Street.

Adney still expects “the economy to grow without recession by the end of this decade.” He said that the target for the end of this decade is still 10,000 points.

He added that the previous 8,400 point year-end forecast is now the target of the S&P 500 in mid-2027. Its 2027 earnings target of $425 per share remains unchanged.

Markets focus on the Federal Reserve's interest rate resolution vote on Wednesday. Most traders expect interest rate hikes as Chairman Kevin Walsh vows to control inflation. In an earlier report, Adney wrote, “For stocks, the stagflation combination of rising inflation and slowing growth will be particularly difficult.”