Yardeni Research reaffirmed its S&P 500 target of 7000 for 2025 but raised the probability of a bearish scenario to 30% while trimming the odds of a 'melt-up' outcome.
The firm cited growing concerns about frothy valuations in AI-related names, weakening investor sentiment, and signs of stress in credit markets as reasons for increasing the weight on downside risk. Short-term technical indicators, including indices slipping below their 50-day moving averages, contributed to the reassessment.
Despite the higher bearish probability, Yardeni highlighted that extreme fear readings in sentiment indicators have historically preceded market rebounds, and it pointed to resilient consumer spending and strong retail sales metrics as offsets that support the base-case target.
The firm reduced its bullish scenario odds to roughly 15% and elevated the negative-case odds to 30%. Attempts to reach leadership for comment were unsuccessful. The research note also included a correction clarifying that the 7000 target is for 2025, not 2024.