Wall Street veteran Adrian: The risk of war is far from over, but the US stock market will not return to its March lows.

Ed Yardeni, a senior strategist on Wall Street, observes market cycles for a long enough time to know when panic is reaching its peak. When the S&P 500 index falls more than 9% from its historical high and at the same time President Trump looks increasingly eager to end the Middle East war that triggered this sell-off, he becomes convinced that the U.S. stock market is ready for a rebound. On March 31st, the day after the market bottomed out, Yardeni issued a statement to clients, stating that this round of adjustment had ended. A few days later, he also mentioned that it was a good time to buy technology stocks that had been heavily hit. His judgment proved to be correct. With the market's optimistic expectations of a ceasefire agreement between the U.S. and Iran replacing concerns about the long-term economic impact of war, the U.S. stock market steadily rose over the next three weeks. This led to the Nasdaq 100 index setting its longest continuous rise record since 2013, and the S&P 500 index repositioning itself above its January high. In an interview, Yardeni stated, "This sell-off has characteristics of a capitulation decline. I strongly believe in contra-indicators - when market sentiment collapses like that, it usually means the worst phase has passed." "There have been many precedents in history showing that the market often bottoms out when conditions look the worst." However, this does not mean he has turned completely optimistic. With Trump's statements about the imminent end of the war shifting back and forth, and peace negotiations evolving into a standoff over the critical waterway of the Strait of Hormuz, Yardeni predicted that this conflict would limit market gains until a resolution is reached. He said, "It's hard to imagine things will really end in the next few days or even weeks. The situation could still be quite chaotic." "I think the market may enter a period of volatility - a consolidation phase, which may last throughout the summer." Throughout his nearly half-century career on Wall Street, Yardeni, the head of his eponymous research firm, has accumulated a large following with his bullish forecasts issued ahead of the stock market making historical new highs. Of course, he hasn't always been right. Like many others, he was also taken by surprise with the market's drastic decline in 2022 due to the Federal Reserve's aggressive rate hikes in response to soaring inflation. And last year, when Trump's tariff policies caused market volatility, he initially underestimated the subsequent rebound in the stock market. However, he has also made many accurately timed predictions. He correctly identified the bottom of the stock market in the month the bear market ended in 1982; and successfully predicted the bottom of the S&P 500 index in March 2009. Last December, he made a bearish call on the so-called "Fab 7" tech stocks, which later fell in February and March of this year. After the market started to rebound earlier this month, he stated that tech stock valuations had fallen enough to be an attractive entry point for long-term investors. Since then, the Nasdaq 100 index has risen by 11%. Yardeni stated that large tech companies have reestablished their dominance in the market and are gradually becoming "all-weather stocks." During periods of economic uncertainty - such as during a pandemic, a phase of soaring inflation, or geopolitical turmoil during Trump's tenure - investors tend to gravitate towards these companies. He said that this group still steers the overall market. Although he remains cautious in the short term due to the uncertainty of the war situation, he continues to adhere to his year-end target of 7700 points for the S&P 500 index, which implies about an 8% upside from the closing level on Wednesday. There is still a lot of money waiting on the sidelines to enter the market, and corporate earnings performance remains strong. Yardeni stated that analysts' optimistic earnings forecasts were one of the reasons why the U.S. stock market did not experience a further sharp decline after the bombing of Iran began in late February. Yardeni said, "Even during the sell-off, earnings were still rising - almost as if analysts hadn't received the news that war had broken out." He added, "I don't think the market will retest the lows of March 30th." "There is too much money on the sidelines ready to enter on a dip."