Wall Street strategist Tom Lee forecasts a significant market rally through year-end, citing renewed investor confidence following President-elect Donald Trump‘s victory and strong market performance.
What Happened: Lee, head of research at Fundstrat, told CNBC’s Halftime Report that markets could surge between 5% and 10% by year-end, following what he called “the best move in the history of any post-election rally.”
“This historic rally needs to be respected,” Lee said, noting unprecedented pre-election derisking and potential “animal spirits” being unleashed by expectations of deregulation and a more business-friendly environment.
Despite positive indicators, Lee acknowledged potential headwinds in the coming months, suggesting market dynamics could shift as fiscal policies take effect or expectations adjust.
The prediction follows strong market performance, with the S&P 500, tracked by the SPDR S&P 500 ETF Trust SPY, rallied 2.85%. Meanwhile, the Nasdaq 100, tracked by the Invesco QQQ Trust QQQ, soared 4.12% on Thursday.
Why It Matters: Supporting the bullish outlook, Goldman Sachs recently lowered its U.S. recession probability to 15%, citing robust job growth.
However, economists warn that a Republican administration could present new challenges, including increased inflationary pressures from higher tariffs and growing budget deficits.
Market observers note that rising U.S. Treasury yields and a strengthening dollar could complicate the Federal Reserve’s interest rate strategy. The bond market appears more focused on the fiscal and inflationary implications of Trump’s victory than the Fed’s dovish stance.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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