- The slump in stocks could be coming to an end, Ed Yardeni told Bloomberg TV in a recent interview.
- The market strategist believes the S&P 500 bottomed when it plunged to 3,667 last month.
- Yardeni accurately called stock market bottoms in both 1982 and 2009.
The 2022 bear market in stocks could finally be coming to an end, according to Ed Yardeni.
The veteran market strategist pinpointed June 16, when the S&P 500 closed at an 18-month low of 3,666 points, as a likely stock market bottom.
"It's never easy to pick a bottom in the stock markets, but I'm going to try," the Yardeni Research president told Bloomberg TV in a recent interview. "On June 16, when we fell down to 3,666 on a closing basis, I think that was the bottom."
The index has rallied 8.2% to just under 4,000 points since that date, with some investors starting to believe that inflation has peaked and pointing to signs that the labor market is starting to cool.
"[Since June 16] we've seen commodity prices coming down and we've seen a slowing in the economy, which I think will help to moderate inflation," Yardeni said.
Yardeni has established a reputation on Wall Street for accurately calling stock market bottoms in the past. The ex-Deutsche Bank strategist identified market troughs in both 1982 and 2009.
Better-than-expected second-quarter earnings are one cause for Yardeni's bullishness.
"The real question is going to be the earnings season," he told Bloomberg. "So far it's going well, it hasn't trashed the market and the market has held up quite well."
Walmart is one example of an outlier in terms of earnings disappointments. Shares in the biggest US retailer fell by almost 10% in Tuesday's premarket after missing forecasts after the closing bell Monday.
But Yardeni's optimism could be tested this week, with Big Tech giants including Amazon and Apple set to publish their second-quarter earnings reports.
Yardeni added that he's not expecting the Federal Reserve to have to hike interest rates above 3.25%, with quantitative tightening and the dollar's continuing strength already acting to constrain monetary policy.
"I'm in the range of 3% to 3.25%," he said, having been asked how high he thinks interest rates will rise from their current level of 1.75%.
"I think what has to be factored in is quantitative tightening, which means the reduction in the Fed's balance sheet, has a tightening impact, accounting for at least 50 basis points," Yardeni added. "There's a strong dollar, which also accounts for around 50 basis points."