The recent sell-off in high-flying US technology and artificial intelligence stocks is a healthy pullback and not a cause for alarm, according to Ed Yardeni, President at Yardeni Research. He believes a 1999-2000 style market meltdown is unlikely, precisely because so many investors are already worried about such an outcome.Despite recent market volatility, Yardeni remains optimistic about the outlook for US equities, reiterating his target for the S&P 500 to reach 7,000 by the end of the year. He stated his belief that the market is still in a bull phase and that a potential resolution to the government shutdown could act as a positive catalyst.He downplayed job cuts pointing out that they are mostly concentrated in the technology sector, which can be explained by significant productivity gains, and in warehousing, which is undergoing a shift towards robotics and automation. According to Yardeni, these trends do not reflect a fundamental weakness in demand for technology or retail services, and he expects displaced tech workers to find new jobs relatively quickly.
On the US political front, Yardeni does not anticipate major shifts in the Trump administration’s core policies but does foresee a change in rhetoric. He suggested that Republicans would likely increase their focus on the affordability issue, aiming to talk more about low energy prices and potentially introduce policies to bring down food costs. Regarding tariffs, Yardeni opined that even if the Supreme Court rules the existing tariffs unconstitutional, the administration would likely claim victory, arguing that the tariffs served their purpose in renegotiating trade deals.Also Read: US market could crash, hold gold and cash, says Port Shelter’s HarrisTurning to India, Yardeni expressed a positive view, concurring with Goldman Sachs’s recent upgrade of the country’s equities to ‘overweight’. He described the Indian market’s recent period of flat-to-down performance as a “healthy development” following several years of outstanding returns. This consolidation, he argued, allows valuations to realign with earnings growth.Also Read: GLS 2025 | India’s growth momentum builds on policy push and investor confidenceYardeni concluded that the outlook for India is “quite good,” particularly if global trade uncertainties around tariffs are resolved. He also highlighted the ongoing strategic shift of production away from China and into other nations, including India, as a significant long-term tailwind.For the entire interview, watch the accompanying videoCatch all the latest updates from the stock market here
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