July will be a 'stronger month' for stocks, says Fundstrat’s Tom Lee
Speakers
Tom Lee
— Managing Partner & Head of Research, Fundstrat
Summary
Tom Lee expects July to be a strong month for stocks, driven by Q2 earnings upside and dip buying from underperforming fund managers. He sees the S&P 500 reaching 8000 or higher by year-end, but warns of a potential bear-market-like pullback between August and October. Headwinds include Fed framework testing and SpaceX share unlock.
- July expected to be strong for stocks on Q2 earnings upside.
- Market P/E likely to fall, allowing multiple expansion.
- Fund managers underperformance may fuel dip buying.
- S&P 500 year-end target 8000, with upside to 8400-8800 on P/E expansion to 22x.
- Potential bear-market-like decline in Aug-Oct, possibly down 20%.
- Fed framework and SpaceX share unlock cited as headwinds.
Ideas
July stocks rally on earnings surprise.
July will be a stronger month for stocks because Q2 earnings are likely to surprise to the upside again, which will lower the market P/E further and create room for multiple expansion. Additionally, many fund managers are trailing benchmarks, leading to dip buying.
Aug-Oct bear market decline possible.
Between August and October, the market could experience something that feels like a bear market, potentially a 20% decline, due to factors such as testing of the new Fed framework and gradual unlocking of SpaceX shares.
