There may be some relief in sight for investors.
Long-time market bull Ed Yardeni believes the painful sell-off is running out of steam.
“I don’t expect more than a garden variety correction, which would be a 10-15% drop,” the Yardeni Research president told CNBC’s “Trading Nation” on Friday.
Even though it has been a painful couple of weeks on Wall Street, Yardeni contends the pullback actually started Sept. 3 — a day after the S&P 500 and tech-heavy Nasdaq hit their all-time highs. As of Friday’s close, the S&P 500 is off 9% since then while the Nasdaq is off 9.5%
He cites frothiness in the tech sector as one of the original major catalysts.
“We’re still seeing that,” said Yardeni. “And then, of course, we’ve got the renewed concerns about the pandemic and when we’re finally going to get a [coronavirus] vaccine. So, it’s not as though the election is going to fix everything.”
But it may fix one big factor: Uncertainty.
Yardeni’s base case is Tuesday’s presidential election will have a clear result within days, and it will help set the stage for a year-end rally. He speculates the S&P 500 will reach 3,500, a level that’s 2.5% below the all-time high hit Sept. 2.
By the middle of next year, Yardeni predicts the index will reach 3,800, a 16% jump from the current level. He lists a post-presidential election environment, easy money policies, economic growth and coronavirus vaccine optimism as positive drivers.
Yardeni also notes the economic recovery should still be strong enough to support a record rally in 2021.
Reference: CNBC
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