Fundstrat’s Tom Lee is out along with his subsequent eye-popping prediction — and it implies excellent news for the market within the coming days. In a Tuesday word to purchasers, the agency’s head of analysis mentioned buyers ought to “purchase the worry” heading into the Federal Reserve’s rate of interest coverage announcement scheduled for Wednesday. Lee mentioned there’s a excessive likelihood of a soar between 4% and 5% over the 5 classes following the assembly, with the market led greater by small-cap shares. “Briefly, we see a risk-on rally beginning Wed that would add +100 factors to the S & P 500,” he informed purchasers. It’s Lee’s newest in a string of massive, however largely profitable, calls in latest months. His word about small caps main the ascent falls in keeping with a forecast earlier this yr that the Russell 2000 would surge 50% in 2024 . Lee mentioned buyers ought to anticipate a achieve of not less than 6% for small caps throughout this run alone. For reference, the small cap-focused index is at the moment up greater than 10% this yr. It has been helped by a 9.5% advance to date in July, as buyers rotated into these names on rising hopes for forthcoming rate of interest cuts from the Federal Reserve. “We nonetheless see this because the ‘summer season of small caps’ so our choice is to be shopping for,” he mentioned. An increase of 5% would propel the S & P 500 to a brand new all-time intraday excessive, topping the report set earlier this month. Fed funds futures are pricing in a greater than 95% likelihood that rates of interest stay unchanged on the July assembly, based on CME’s FedWatch Instrument . However buyers might be primarily looking forward to indicators that the central financial institution is able to begin reducing in September, and fed funds futures buying and selling suggests a 100% chance of easing at the moment.
