Ed Yardeni, a prominent market strategist, is optimistic that the turbulent stock market has reached its low point, positioning it for potential recovery. Yardeni, the head of Yardeni Research, noted last week that the S&P 500’s decline of 9.1% from its peak on January 27 is indicative of a market bottom. Nevertheless, he acknowledges the unpredictability of current market conditions, especially in light of ongoing geopolitical tensions influencing investor sentiment.
In a recent market update, Yardeni emphasized that the next few days are critical for the market’s trajectory, suggesting that immediate developments could significantly impact his forecast. He expressed concern particularly about escalating rhetoric from former President Donald Trump, who made controversial comments on social media. Trump indicated a potential increase in U.S. military activity against Iran, demanding the country to “Open the F—–‘ Strait” of Hormuz, or face dire consequences. This dramatic message is consistent with previous threats made by Trump, although he also indicated a possibility of a diplomatic resolution.
Amidst these uncertainties, Yardeni finds some comfort in historical patterns following major military engagements in the U.S. He pointed out that the S&P 500 had consistently rebounded two years post-conflict, with notable gains ranging from 31% to 44% after significant events such as the Korean War and the Gulf War. This historical context offers some reassurance to investors during this volatile period.
Further supporting Yardeni’s bullish outlook is the improved valuation metrics for the S&P 500, which has decreased from 23 times earnings in late October 2025 to approximately 19 times now. This decline comes alongside a 12.7% increase in corporate earnings, making the current market environment appear more attractive to potential investors.
Additionally, Yardeni highlighted positive market dynamics, including solid breadth and historically high profit margins, which could further bolster the market’s recovery potential. Despite the looming uncertainties, his overall sentiment leans towards cautious optimism.
