Traders work on the floor of the NYSE
Ed Yardeni expects the S&P 500 to finish the year at 7,900. Reuters

A top Wall Street analyst Ed Yardeni trimmed his S&P 500 forecast for the end of the year and warned increasing risks of a downturn over the next months as inflationary and geopolitical pressures mount.

Concretely, Yardeni now expects the index to finish the year at 7,900, compared to 8,400 just last month. Back then he had upgraded it from 8,250 as corporate earnings kept soaring.

"Given the recent backup in bond yields, we are lowering our estimate for the forward P/E of the S&P 500 at year-end from 19.8 to 18.6, which lowers our year-end target from 8,400 to 7,900," he wrote in a note to clients that was reported by Bloomberg.

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However, Yardeni said he expects for the economy to " grow without a recession through the end of the decade" and his target for then stands at 10,000.

Yardeni is not the only one being cautious about the S&P 500's path in the short term. This week, Bank of America's head of U.S. equity and quantitative strategy, Savita Subramanian, said the index could be due for a drop after an unusually long stretch without a significant stock market decline.

Subramanian said the S&P 500 has experienced only one pullback of at least 5% in 2026, compared with an average of roughly three such declines in a typical year.

The market has gone even longer without a full-fledged correction, generally defined as a drop of at least 10% from a recent 52-week high. According to Subramanian, the last correction occurred in the spring of 2025, when markets were shaken by tariff concerns.

"Pullbacks are normal," Subramanian wrote, according to CNBC. "In our view [we] are overdue for a pullback." The warning comes as several pressures are converging on U.S. stocks, including historically difficult seasonal trends, elevated Treasury yields, renewed inflation concerns and growing anxiety around the artificial intelligence trade that has helped propel parts of the market higher.

September and October have historically been particularly challenging for stocks. Bank of America noted that the S&P 500 has averaged a 0.6% decline during the two-month period based on data going back to 1928, making it the weakest average two-month stretch of the year for the benchmark.

Signs of that seasonal weakness may already be emerging. The major U.S. averages are coming off a losing week and have declined so far in September. Stocks edged down on Monday as concerns about AI safety weighing on semiconductor companies and other stocks closely tied to the artificial intelligence boom.