The S&P 500 could jump a further 20% as the US recovers from a 'rolling recession', market veteran Ed Yardeni says

Ed Yardeni.

Adam Jeffery/CNBC/NBCU/Getty Images

• US stocks could rally a further 20% as the economy recovers from a "rolling recession," Ed Yardeni said. 
• "For those who are waiting for a recession, I think we've had it all along," he said. 
• Yardeni also grounded his optimism on bullish earnings forecasts and a broadening of the equity market rally. 

US stocks stand to rally a further 20% over the next 18 months as the US economy improves, according to market veteran Ed Yardeni.

Speaking in a CNBC interview on Monday, the Yardeni Research president said the economy has already moved past experiencing a recession, and is now in recovery mode. That could power the S&P 500 to somewhere between 4,800 to 5,400 over the next 18 months, he added. The index closed near 4,522 on Monday.

"I think that's going to be because there is no recession, because earnings are going to be picking up, and I think because the market will in fact, broaden out," Yardeni said.  

US stocks have enjoyed impressive gains so far this year, with the S&P 500 jumping about 17% in 2023. That's despite the Fed jacking up interest rates by 500 basis points over the past five quarters, from near-zero levels to upwards of 5%, to cool inflation. 

"I think the market was kind of overjoyed with a disinflationary soft landing scenario. That seems to be what we're in," he added. "I've been thinking for quite some time that we're in a recession, but I argued that it's a rolling recession, not an economy-wide recession. Now I think we're in a rolling recovery," Yardeni continued. 

Yardeni has previously argued that a rolling recession as opposed to an economy-wide recession hit different sectors of the US economy as the Fed embarked on its tight monetary policy. 

"For those who are waiting for a recession, I think we've had it all along," he told CNBC, adding that while there's been weakness in some industries, other sectors have held up. However, Yardeni still warned that the commercial real estate industry could soon go into recession.

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