Veteran bull Edward Yardeni sees S&P 500 rebounding to a record high next year with the economy avoiding recession

• Edward Yardeni thinks the US could avoid recession while the S&P 500 hits a record high in 2023.
• "I don't recall so much stock bearishness in a very long time," he said in the Financial Times.

Edward Yardeni is optimistic that the S&P 500 will rebound to new highs next year after entering a correction this year, as the US economy avoids a recession.

This comes as the Federal Reserve's aggressive stance on tightening monetary policy to curb inflation has raised worries that it could induce a recession in the process.

"In my opinion, investors have turned too pessimistic about the outlook for the US economy and stock market. I don't recall so much stock market bearishness in a very long time," the president of Yardeni Research wrote in the Financial Times.

The veteran Wall Street bull noted Wall Street analysts have raised corporate earnings forecasts and pointed to a strong US dollar as evidence that investors still see the US as a "haven" despite volatile markets.

He also noted that US consumers are "in good shape" as a tight labor is pushing people to seek better pay while still enjoying excess savings from Covid-19 stimulus beginning in 2020.

For now, the S&P 500 is about 16% off its recent high, well in correction territory. But Yardeni attributed much of the S&P's losses to mega-cap tech stocks like Alphabet, Amazon and Apple.

Meanwhile, he sees inflation peaking over the summer at 6% to 7% before falling to 3% to 4% next year without a recession.

"The bottom line is that I'm in the correction camp for now. I expect to see the S&P 500 in record high territory again next year," Yardeni wrote.