Jeremy Siegel Doesn't See a Stock Crash Anytime Soon

“It is hard to say when that’ll come, but certainly I don’t see anything threatening the market that would erase more than another 5% or so from today’s level,” Siegel said. “Nvidia’s earnings report this week is the next key test for technology stocks. Expectations are so high, if there’s any degradation in the outlook for sales, this could cascade into further pressure for the AI darling and technology stocks.”

Nvidia reports earnings after the market close Tuesday.

Addressing a surge in bond yields last week, Siegel noted that inflation-adjusted 10-year bonds are yielding just under 2%, the highest real yields in decades and up from -1.5% three years ago, which he called “a massive change.”

Rising real yields affect equity valuations partly because they represent more competition for stocks, he noted. Thanks to Federal Reserve tightening over the past year-plus, investors can get almost 5.5% for short duration Treasurys now, “but these yields have reinvestment risk,” as there’s no guarantee these levels will be in place in one to two years, Siegel wrote.

Stocks currently are priced at a 3% risk premium over Treasury inflation-protected securities, roughly in line with their historical premium, according to the economist.

“This suggests stocks are currently priced on par with their past excess returns. Of course, both stocks and bonds are priced to deliver lower absolute levels than they did — but the reduction is now similar for both stocks and bonds,” Siegel added.

Photo: Bloomberg