① Tom Lee stated that the stock market may experience a maximum correction of 10% in the next eight weeks He said that investors should remain cautious before the Federal Reserve cuts interest rates and elections, but should also "buy on dips" in a timely manner.
Tom Lee, co-founder and research director of Fundstrat Global Advisors, a US investment firm, said that the US stock market may plummet by 7% to 10% in the next eight weeks, and advised investors to be prepared for severe turbulence, as a series of events will challenge the recent strength of the US stock market during this period.
I think investors should remain cautious in the next eight weeks. In seven out of the eight months this year, the market has been rising. So we know this is a very strong market. But then the Fed's interest rate cut in September and the US presidential election will make people nervous
According to the CME Federal Reserve Observation Tool, the market currently expects a high probability of a 25 basis point (61%) rate cut in September, but the probability of a 50 basis point rate cut also reaches 39%.
Wall Street analysts generally believe that the market may not welcome significant interest rate cuts. Bank of America wrote on Tuesday that if the Federal Reserve had to cut interest rates by 50 basis points, it could be in response to rising recession risks.
This Friday, the United States will release a key non farm payroll data. Some Wall Street insiders are concerned that this report may be weaker than expected. But Lee pointed out that as investors readjust their interest rate outlook, even if the non farm payroll data is better than expected, there may still be a pullback.
If the strong non farm payroll data causes investors to worry and leads to a decline in the US stock market on Friday, I will buy on dips, "he said.
Lee was one of the few bulls on Wall Street last year, predicting at the end of 2022 that the S&P 500 index would soar more than 20% to 4750 points in 2023. As expected, the index unexpectedly rose sharply last year, with the final price only slightly below its set target level by more than thirty points. According to reports, among the strategists tracked by Bloomberg, Lee's prediction is the closest, jokingly referred to as the "Wall Street God Operator".
Moreover, his optimistic outlook for the US stock market in 2024 is largely correct, with the S&P 500 index rising 16.57% so far this year.
Lee believes that the uncertainty of the election may deter investors before the election results are announced. For non election year stock markets, September is also a challenging month. Some analysts believe that the volatility related to the election may continue until mid October.
However, he firmly believes that the "difficult" weeks ahead should be seen as buying opportunities.
I think people have the opportunity to buy (on dips) in the next eight weeks, "he said in an interview." I think being cautious is a good thing, but I'm just prepared to buy