- Wall Street strategistTom Lee remains optimistic about the stock market despite its recent selloff on mounting concerns that the economy is rolling over. After predicting the massive surges in 2023 and 2024, he said a big rebound is “very possible” in the next few months and pointed out that the bulk of yearly stock gains can come down to just 10 of the top trading days.
Fundstrat Global Advisors cofounder Tom Lee has built a track record recently of correctly predicting the stock market, and he anticipates a rebound soon after a brutal selloff.
US indexes have erased their post-election gains as President Donald Trump presses ahead with his aggressive tariff agenda, which has spooked consumers and businesses while sparking concerns the economy is slowing.
But on Wednesday, even as ADP’s private-payroll report showed weak hiring, Lee said he remains optimistic, telling CNBC that stocks have already priced in a lot of bad news after markets suffered a correction in sentiment and momentum.
“I think it’s very possible that March, April, May could actually be one of these huge rally months where we’re rallying 10-15%,” he said.
His outlook carries extra weight as he has demonstrated a knack for seeing big surges, including the S&P 500’s back-to-back gains of more than 20% in 2023 and 2024.
Among the forecasters surveyed by Bloomberg, Lee’s call in 2023 turned out to be the most accurate. And last year, he said the S&P 500 could end 2024 above 5,500, then hiked his forecast to 6,000. It eventually finished at just below 5,900.
On Wednesday, he said he believes now is a time to buy with markets unsettled and warned that missing big individual trading sessions can be costly.
For example, the market’s 10 best days last year added up to 20 percentage points for the S&P 500, Lee explained. But excluding those 10 days, the index was only up 4%.
“You don’t get 20% years because it’s good through the year,” he added. “It’s just the 10 best days.”
Lee thinks one of this year’s best days could be around the corner. If growth starts to stall or the job market softens, then a “Trump put” or a “Fed put” would be in play, meaning the president or the Federal Reserve takes action to support the economy.
“So I think that’s what’s going to be the positive catalysts in the next couple of weeks,” Lee said, noting that stocks often bottom out before bad news peaks.
The Atlanta Fed’s GDPNow tracker shows the first quarter is currently on track for a 2.4% contraction, while the latest jobs data point to signs federal layoffs and tariff fears are creeping in.
For his part, Trump has maintained that he isn’t watching the stock market as he determines his tariff policies. And on Sunday, he declined to rule out a US recession this year.
Judging by CNN’s Fear & Greed index, investors have digested plenty of bad news. It currently points to “extreme fear,” which some contrarians see as a buy signal.
In fact, Warren Buffett famously preached that investors should “be fearful when others are greedy and to be greedy only when others are fearful.”