The market is rising, and something about the current picture is reminiscent of 1999. At least, that is the view of Ed Yardeni, founder and president of Yardeni Research. He compares today’s rally to the legendary run-up to the dot-com bubble when stocks surged until a hard landing abruptly followed.
In a note published recently, Yardeni asked whether the stock market is once again returning to the sort of irrational exuberance that blew up the tech bubble at the end of the 1990s. His own answer was “possibly.”
That question comes in the wake of impressive gains. Last week, the Dow, S&P 500, Nasdaq, and even the small-cap Russell 2000 each hit all-time highs. The market reacted positively to the Fed’s move to cut its key rate by 25 basis points.
Yardeni notes a key difference from 1999, however. Today’s growth is supported by real corporate profits, not just investor dreams.
For example, the expected earnings per share for the S&P 500 last week hit a record $294.91, nearly matching the consensus forecast for 2026 at $304.88. And it is not just the largest companies: mid- and small-cap firms are also showing robust performance. Still, the S&P 100 continues to pull ahead, which does resemble the final months of the 1990s.
Nevertheless, there are reasons for caution. According to Yardeni Research, the forward price-to-earnings (P/E) ratio for the S&P 500 is at 22, not far from the 25 seen at the dot-com bubble’s peak. Attractive, perhaps, but somewhat concerning.
Despite this risk of overevaluation, Yardeni remains optimistic. His forecast for the S&P 500 is 7,700 by the end of 2026. However, he does not rule out a faster scenario. If the market keeps rising thanks to the Fed’s dovish policy, these levels could be reached earlier, even if a correction is inevitable along the way.
Yardeni believes, though, that even if a pullback comes, it will not be a repeat of the early-2000s wipeout. “If the stock market parties like it’s 1999 in response to the Fed’s monetary easing, then we might get there sooner as a result of a melt-up that could be followed by a meltdown,” he said. “If so, the hangover this time isn’t likely to be as severe as the one that followed the Party of 1999, in our opinion,” he added.
Overall, Yardeni’s base case is for continued steady growth. He calls the current era the “Roaring 2020s, pointing out the similarities to the Roaring 1920s. He does not rule out the possibility of another historic bull run. Since the 1920s, the S&P 500 has more than doubled in a decade only four times. Yardeni believes this could be the fifth.
