Despite recent volatility, Tom Lee, the head of research at Fundstrat Global Advisors, remains optimistic about the stock market’s future. He believes that much of the negative news has already been priced in and that a substantial rally could be forthcoming in the coming months. “I am optimistic.
I mean, I can understand why investors are sitting on their hands … they don’t know how severe these tariffs will be or how long they are,” Lee said on Wednesday. “But, now we’re seeing a big price correction—a decline in sentiment.
And then, something like today, we got a bad ADP jobs report, and the market is actually up.
Lee observed that the market rising on bad news indicates that investors have already accounted for much of this negativity in their valuations.
Lee optimistic about market rebound
He believes that March, April, and May could potentially see significant gains, with stocks possibly rallying 10% to 15%.
This week, all three major averages slid more than 1% each to start the month. President Donald Trump’s tariffs and retaliatory tariffs on U.S. goods affected investor sentiment and future profit expectations. The S&P 500 is now down 1.5% for the year, and the Nasdaq Composite briefly entered a 10% correction from its recent high. Despite this, Lee remains a buyer of stocks.
On Wednesday, all three indexes rallied, recovering from their two-day slide, as White House concessions towards automakers boosted investor confidence. “We already know stocks will bottom before bad news peaks,” Lee said. And so, if we’re seeing the market not fade on bad news, that means we’ve already priced in many things that would scare us.
Lee’s optimism stands out in a market environment characterized by uncertainty and volatility, driven by geopolitical tensions and economic data fluctuations.
Investors will be closely watching to see if his predictions hold true in the coming months.
Photo by Ayadi Ghaith on Unsplash
