Ed Yardeni just hiked his year-end forecast for the S&P 500 to the highest of any Wall Street forecaster. Why he says we're in the 'Roaring 2020s'

"Our key assumption is that the economy will remain resilient, and so will earnings," Yardeni said in a note (6). "That's been our mantra since we first started writing about the Roaring 2020s during the summer of 2020."

Yardeni believes we're in the Roaring 2020s — but what does that mean?

Since the beginning of the decade, Yardeni has been adamant that the United States is experiencing a second "Roaring Twenties" (7).

The 1920s earned the moniker "Roaring 20s" in the U.S. for several reasons. A major factor was the country's economic prosperity, with crises marking the beginning and end of the decade. Heading into 1920, America was recovering from several large issues, including World War I (8) and the influenza epidemic (9). However, the country still financially thrived for most of the decade, before the 1929 stock market crash that led to the Great Depression (10).

The 2020s also began with a crisis: the COVID-19 pandemic in early 2020. The U.S. economy has rallied in many ways since then. Issues regarding the pandemic caused the S&P 500 to plunge by 34% — but it recovered after only eight months and actually gained value by the end of 2020 (11).

As in the 1920s, Yardeni believes America will financially flourish in the 2020s. He isn't worried about the impact of the Iran war on this outlook. The S&P 500 performance dropped after the U.S. and Israel attacked Iran earlier this year, but it had rebounded by mid-April and has continued to grow (12).

"We've never seen consensus earnings expectations rise so quickly for the current and coming years as they have in recent months," Yardeni wrote. "The result has been an earnings-led meltup in the stock market" (13).

What melts up, must melt down

A "melt-up" is a sudden surge in stock market performance, usually unexpected and unsustainable. It's known to be driven by investor sentiment rather than economic data. With a melt-up, people see stock prices rising and rush to buy shares so they don't miss out on the opportunity (14).

Yardeni's explanation of the current market melt-up is that it's based on corporations' earnings, not just investor sentiment.

Yardeni announced the firm's latest S&P 500 prediction on Sunday, March 10. The previous Friday, 89% of S&P 500 companies had reported their Q1 2026 earnings; of those, 84% reported that their earnings per share had exceeded estimates, which is above the 5-year and 10-year averages (15).

This may seem like great news, but there are cons to consider. For instance, the general understanding of a melt-up is that it's unsustainable.

A prime example of a melt-up is the dot-com bubble from the 1990s and early 2000s. Investors rushed to buy technology stocks, which pushed the Nasdaq Composite index to an all-time high at the time. The speed and money involved in this stock-buying rush were untenable. When the dot-com bubble burst, the Nasdaq lost almost 80% of its value in a little over two years (16).