Veteran analyst Ed Yardeni on Saturday predicted that Santa Claus could be coming early to Wall Street this year, stating that U.S. equities are showing early signs of holiday cheer.
Market Recovery
Yardeni said in his latest note that the stock market’s recovery aligns with predictions made on November 23.
During the holiday-shortened Thanksgiving week, the Dow Jones Industrial Average rose over 4%, the S&P 500 gained nearly 5%, while the Nasdaq Composite surged around 6%.
"Once their panic selling [of bitcoin] subsides, the stock market should recover. That could happen over the next couple of weeks, setting the stock market up for a good year-end rally," Yardeni said last week.
The S&P 500 has risen above its 50-day moving average, indicating a potential climb to 7,000 by year’s end.
Alphabet's Rise
Meanwhile, Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) saw its stock price increase following the announcement of its new language model, Gemini 3, which reportedly outperforms competitors and uses a more cost-effective Google Tensor Processing Unit (TPU) chip. Alphabet's Class A shares are up nearly 8% over the previous five trading sessions.
However, AI bellwether Nvidia Corp. (NASDAQ:NVDA) has not fully recovered, with its stock down by over 2% over the previous five trading sessions.
Fed Rate Cut Optimism
Adding to the optimism, NY Fed President John Williams hinted at a possible interest rate cut during the upcoming FOMC meeting on December 10, further fueling investor confidence. The Nasdaq also shows potential for reaching a new record high with a 2.5% increase.
The recent rebound in the S&P 500 follows a period of market nervousness, particularly around AI stocks. Yardeni previously advised investors to view the pullback in AI stocks as a buying opportunity. He argues that the current market caution contrasts with the late 1990s, where a lack of concern preceded the tech wreck.
Yardeni has previously noted the potential for a stock market meltup, reminiscent of the late 90s tech boom, driven by factors like soft inflation and a determined Federal Reserve. This sentiment was echoed in Yardeni's previous prediction from October 27, where the analyst adjusted his predictions for a “Roaring 2020s” bull market scenario.
The market’s recovery also aligns with Yardeni’s views on the comparative value of gold and bitcoin. In a note from October 15, he described gold as “physical bitcoin,” suggesting a shift in investor sentiment towards traditional assets amidst digital asset volatility.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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