Has the U.S. Stock Market Bottomed Out? Wall Street's Growing 'Bottom Is In' Sentiment

Master, today I will discuss the 'Bottom is in' sentiment that is currently heating up the U.S. stock market. In a market that has recently experienced short-term adjustments due to uncertainties in tariff policies and concerns over reigniting inflation, major Wall Street figures are consecutively releasing positive outlooks. In particular, the remarks made by Ed Yardeni during his appearance on CNBC on April 2nd acted as a major catalyst.

While everyone is gripped by fear, we three will discuss whether the voices of Wall Street institutions shouting \"the bottom is behind us\" are signals announcing a true opportunity or a terrible trap leading to a misjudgment of a temporary bounce.

Mew

Master, first I will provide a data briefing on the current market situation and key remarks from Wall Street.

📊 Wall Street Market & Data Briefing

• Ed Yardeni's Bottom Declaration: Ed Yardeni, president of Yardeni Research and a renowned Wall Street strategist, officially declared on CNBC on April 2nd that "The market bottom is in." He analyzed that short-term tariff shocks and macro noise have been largely priced into stocks, and that the strong fundamental health of the U.S. economy will defend against further declines.


• Major Institutions' Year-End S&P 500 Targets: The 2026 targets of major Wall Street investment banks are more clearly divided than ever.
  • Morgan Stanley: 7,800. They maintain an optimistic stance, believing that solid global growth will support the stock market.
  • Yardeni Research: 7,700. They are expecting a strong V-shaped recovery.
  • Bank of America (BoA): 7,100. They take the most conservative stance, suggesting there is little upside from current price levels and that investors should prepare for volatility.


• Market Valuation: The current 12-month forward PER of the S&P 500 is around 21.2x, significantly exceeding the 10-year average (approx. 18x). Even after the index adjustment, it remains in a historically 'expensive' range.


• Internal Market Shift: There is a very interesting data point. While the market for the past three years was led by a few mega-cap tech stocks, signs of Broadening—where the market's upward momentum expands as capital moves into cyclical and small-to-mid-cap stocks such as utilities (power infrastructure), financials, and industrials—are recently being captured. In particular, the utility sector is showing tremendous outperformance due to the explosion in power demand for AI data centers.

To summarize, while the Wall Street mainstream has begun to predict a 'rebound' amidst short-term market corrections, there is a clear difference in sentiment across institutional targets due to valuation pressures.

Kurumi

My Lord! Did you hear that? Grandpa Ed Yardeni put his stamp on it, saying "The bottom is over!" This is a perfect buying timing, Devilish!

🔥 Wall Street's Bottom Declaration, Now is the Chance for a Full Buy!

First, you have to trust the unwavering conviction of a perma-bull! Grandpa Yardeni is an amazing person who has accurately predicted bull markets over the past few years. When everyone was worried about a recession, he shouted about the 'Roaring 2020s' and told everyone to increase their stock weight! His confident declaration on CNBC on April 2nd that the bottom has passed means that the massive capital of waiting institutions is ready to flood back into the stock market, Devilish!

Second, Morgan Stanley's 7,800 outlook shows a rosy future! Even Morgan Stanley, known for being picky, is predicting a massive rise with a target price of 7,800. Moreover, just as Myu-tan said, the market is much healthier now than in the past! It's not just a few Big Tech stocks barely dragging the market up; we're seeing a 'Broadening' where financials, industrials, and even utilities are all rising together. A bull market supported by a strong lower body never collapses easily, wickedly so!

Third, a correction is just a great sale period for shopping! Looking at historical data since 1950, the U.S. stock market has recorded positive returns in 55 out of 75 years. Declines are short, and rises are long! When the market is slightly shaken by the Trump administration's tariff noise or interest rate issues, only those who overcome fear and scoop up key leading stocks can become rich. We have to sweep up the volume that others are throwing away in fear!

💖 Kurumi's Heart-o-Meter Score: 95/100

My Lord! When major institutions declare a bottom and pour out optimistic reports, there's always a good reason for it! It's time to explode your account by loading up on everything from index ETFs to AI power infrastructure stocks, Devilish!

Mikael

Kurumi, your dangerous optimism remains unchanged even after decades. Human, listen to me carefully before you are swayed by Kurumi's agitation. The 'bottom theory' emerging from Wall Street is often a sweet trap designed to dump volume onto retail investors.

⚠️ The Terrible Trap Hidden Behind the Bottom Theory

First, we must be extremely wary of the speaker's confirmation bias. Ed Yardeni is a fine analyst, but he is a representative 'Perma-bull' of Wall Street. Didn't Mew mention that we must recognize bias to overcome it? The "short-term bottom declaration" of someone who believes the market will rise in the long term, rain or shine, must be coldly halved in terms of reliability. If a famous figure's declaration on a broadcast that the bottom has been reached was the truth, making money in the stock market would be easier than in a casino.

Second, Bank of America's (BoA) 7,100 outlook is the real warning. Why did BoA catch a gloomy target instead of joining the cheers like other institutions? It is because the current valuation burden of the market has reached a critical point. An S&P 500 forward PER of 21.2x means that companies have already priced in their future earnings to the core. If corporate performance falters here, stock prices will collapse like a sandcastle. The number 7,100 is essentially a warning that 'there is nothing to gain by the end of the year even if you buy now, and the probability of losing is high.'

Third, macro uncertainty still holds the market by the throat. What happens if the Trump 2.0 administration's indiscriminate tariff bombs (Tariff Turmoil) hit global supply chains and raise import prices? Inflation will reignite. Then the Fed will have to stop cutting interest rates or even consider raising them. If the 10-year Treasury yield has another seizure, currently overvalued stocks will have no way to hold on. The recent rebound is highly likely just a 'Dead Cat Bounce' before a deeper decline.

Fourth, we must not distort Morgan Stanley's message. While Morgan Stanley called for 7,800, what they truly emphasized in their report was 'active fund management and maximum risk management.' It means the era where the entire market rises is over, and since the gap between winners and losers will widen extremely, do not blindly follow the index. If you press the buy button with your eyes closed like Kurumi, your account will melt away.

🚨 Mikael's Risk Score: 78/100

Human, now is not the time to jump in like a moth shouting 'full buy,' but a time to pull defensive power to the limit. You might buy thinking it's the bottom, only to see the first and second basements in turn. I believe it would be better to secure plenty of cash and wait and see.

Mew

Calm down, both of you. To summarize the facts for Master, both Kurumi and Mikael contain half of the market's truth.

In reality, a heavyweight like Ed Yardeni declaring a bottom on a major media outlet like CNBC becomes a powerful catalyst that instantly flips the market's 'investment sentiment' (sentiment) to positive. This is because the stock market is strongly influenced by sentiment and liquidity. Morgan Stanley's 7,800 outlook also pointed out the structural shift where the expansion of the AI industry is pulling up the performance of utilities and industrials.

However, as Mikael pointed out, BoA's 7,100 outlook is data that cannot be lightly ignored. It is evidence that even large banks are seriously concerned about the current high PER valuation of 21.2x, the damage to corporate profits due to tariff policies, and interest rate uncertainty due to sticky inflation. The market is currently walking on thin ice, where it can fluctuate greatly at even a single piece of small news.

Master, in the world of investment, 'All or Nothing' style betting is a shortcut to ruin. While accepting the bottom theory to some extent, one must not make the mistake of pushing all assets in at once.