Tom Lee repeats: S&P 500 to 8,000 points, this month
Tom Lee expects another explosive rise in the S&P 500. According to him, the price can reach 8,000 points before the end of the month.
Wall Street may be on the cusp of a remarkably strong rally, according to Tom Lee. The head of research at Fundstrat even speaks of the ingredients for a "face ripper", or a sudden and powerful price increase.
According to Lee, four developments are currently coming together that can support the market. A falling oil price, lower bond yields, a Federal Reserve that may become slightly less strict and a market that is technically quite oversold.
Last week, according to Lee, the market came under maximum pressure. The Federal Reserve sounded strict, energy prices were high and investors had reduced their risk considerably.
Something has changed since then. Oil prices have fallen and US bond yields are moving down with them. This removes some of the pressure from risky investments.
According to Lee, the Federal Reserve could also gain a little more room to soften the tone if energy and transportation costs decline further. This is important because, in recent weeks, the market has primarily struggled with the same combination of high oil prices, stubborn inflation, and rising interest rates.
Another argument from Lee is that investors below the surface are still quite cautious. Many positions were phased out before the interest rate decision and several AI stocks are still trading below their June peaks.
According to him, this means that a large part of the market is not extremely optimistically positioned at all. If sentiment is spinning, this can create additional buying pressure. Lee therefore reiterated his price target of 8,000 points for the S&P 500 this month.
Technology and chippers lead the recovery. AMD recently reached a market value of $1 trillion and other chip companies are also doing well. Yet not everyone is equally enthusiastic.
Jay Woods of Freedom Capital Markets points out that the oil price fell sharply for only one day and that fundamentally little has changed. According to him, technology can bring the S&P 500 towards the previous summit around 7,800 points, but broader confirmation is needed to really set new records. In addition, Micron's quarterly figures will be important next week.