Overview

• Ed Yardeni raised his S&P 500 target to 7,000, while Evercore ISI kept a 7,750 base case for 2026 and assigned a 30% probability to a 9,000 bubble scenario by the end of next year.
• Veteran fund manager Dan Niles said stocks can grind higher, pointing to a widely expected quarter-point Fed rate cut on Oct. 29, with CME FedWatch showing 94% odds.
• Niles urged diversification toward less-loved names as lower rates favor small caps, noting recent outperformance of the Russell 2000 versus the S&P 500 and the Mag 7 since the September cut.
• Valuations remain stretched, with FactSet placing the S&P 500’s forward P/E at 22.8 versus a 10-year average of 18.6, a setup that assumes robust earnings ahead.
• Macro crosscurrents persist, with a D.C. shutdown delaying data and ADP reporting a 32,000 job loss in September, even as AI spending headlines such as OpenAI’s multibillion-dollar AMD deal and a caution from Goldman’s CEO about potential 12–24 month drawdown risk shape sentiment.