Wall Street analysts are split on where the S&P 500 goes from here, with one prominent bull holding firm and another pulling back expectations. Fundstrat's Tom Lee argues that the Federal Reserve's expected rate hike could actually set the stage for a stock market rally, while Yardeni Research has trimmed its targets and raised the odds of a bearish outcome. A jump in long-term Treasury yields has become the focal point of the more cautious outlooks—and the direction of those yields is the thread running through both camps' arguments, since long-term Treasury rates serve as the benchmark for valuing future corporate earnings.

Lee, chairman of Bitmine Immersion Technologies and head of tech research at Fundstrat, told CNBC that the S&P 500 could "easily be above 8,200 by the end of the year." He pointed to continued strength in artificial intelligence and technology stocks as the main drivers behind the call, with technology expected to do much of the heavy lifting, according to a summary of his remarks posted on X on September 16, 2026:

TOM LEE SAYS ONE OF THE BIGGEST RALLIES OF OUR LIFETIME COULD BE STARTING

He thinks the fourth quarter could mark the beginning of a much larger move into next year:

– Lee says the S&P 500 $SPX could easily finish above 8,200 by year end – Tech is expected to do much of the… pic.twitter.com/iLAggazV7D

— Tom Lee Tracker (Not actually Tom) (@TomLeeTracker) September 16, 2026

source

Lee also said the Federal Reserve's expected 25 basis point rate hike could ultimately help markets. In his view, raising rates now removes the fear of future hikes, which lowers Treasury yields gives investors more confidence to put money back into stocks.

He noted that large amounts of capital are sitting on the sidelines after recent market down days. That cash, he argued, could fuel a rebound once investors gain clarity on the Fed's policy path and the uncertainty around rates is resolved.

On inflation, Lee added that August headline CPI held at 3.4% year-over-year. He referenced Goldman Sachs research pointing to four temporary inflation drivers: portfolio fees, flash memory costs, trade tariffs, and energy prices. These factors add about 1.7 percentage points to headline PCE inflation but should fade over the next six months. PCE is the inflation gauge the Federal Reserve tracks most closely when setting policy, which is why those temporary drivers sit at the center of the rate debate.

Yardeni Raises Bearish Odds

Yardeni Research took a different view. The firm cut its year-end S&P 500 target to 7,900, down from 8,400, and moved the 8,400 level to mid-2027. It also raised the odds of a bearish outcome from 20% to 30% and lowered the probability of its "Roaring 2020s" base case from 80% to 70%.

The main driver behind the downgrade was the recent rise in Treasury yields. The 10-year U.S. Treasury yield crossed 5% this week, sitting at 4.988% at the time of writing, while the 30-year yield stood at 5.355%. Yields at those levels raise the discount rate applied to future corporate earnings and offer bond investors a return that competes with equities.

Yardeni also cut its year-end forward price-to-earnings assumption to 18.6 from 19.8, while keeping its 2027 earnings forecast for the S&P 500 at $425. Because index targets are built by applying a valuation multiple to projected earnings, trimming the multiple while holding the earnings forecast steady mechanically lowers the near-term number even as the long-run view stays intact. Despite the nearer-term caution, the firm maintained its end-of-decade S&P 500 target of 10,000.

Goldman Sachs Weighs In

Goldman Sachs noted that stocks have historically struggled early in Fed hiking cycles. The S&P 500 has averaged a 2% decline in the three months after past hikes began, but gained an average of 9% over 12 months. The only exception was 2022.

Goldman's chief U.S. equity strategist, Ben Snider, said the medium-term impact on stocks depends on how tightening affects earnings growth.

Lee pushed back on broader pessimism. He said corporate earnings have not yet peaked and that weak housing investment leaves room for further economic expansion. He estimates that a housing recovery could add $30 to $50 to S&P 500 earnings.

He does see a potential pullback later in the year tied to high debt levels at AI firms and a busy IPO calendar, but said widespread market pessimism is itself a reason stocks have not yet hit their ceiling.

With Lee projecting a year-end finish above 8,200 and Yardeni now pointing to 7,900, the divide between Wall Street's bulls and skeptics is set to frame the debate heading into the final quarter of 2026. The markers to watch along the way include the Fed's pending rate decision, whether the inflation pressures Goldman identifies fade within its six-month window, the path of the 10-year Treasury yield around the 5% level, and the AI-sector debt and IPO calendar risks Lee himself flagged.

This article originally appeared on CoinCentral.