Fundstrat’s head of research, Tom Lee, believes that the S&P 500 will march to new record levels by the end of 2025 after brushing aside multiple shocks over the last few years.
In a new CNBC interview, Lee says the S&P 500 is in the midst of the “most hated V-shaped” rally after the stock market index recovered from a 2025 low of 4,835 to a new all-time high of 6,215 points.
According to Lee, many investors dumped their stock holdings during the market’s early-year decline, only to be left on the sidelines as equities staged a strong rebound.
“A lot of folks liquidated at the lows, but we know that whenever the VIX (volatility index) is above 60 and falls below 30, you’ve made a decisive low.
And now visibility is better, tariffs aren’t as bad as we expected, and the inflation impact has been very muted, and outside of tariffs, [underlying] inflation is much lower than people expected.”
Looking ahead, Lee believes that there’s no reason to be bearish on the S&P 500 after casting off five shocks in half a decade.
“I think there’s more upside to 6,600 [points] because the P/E (price to earnings) of the market can go up a lot. We already had five shocks. We had the Covid shock, the supply-chain shock, the inflation shock, the Fed-fastest-hikes-in-history [shock] and then we had the tariff shock.
So five shocks in five years, and earnings kept growing. If this was a stock, we’d say, ‘Look if you try to kill it five times and it still grew earnings, we would put a much higher multiple.”
As of Monday’s close, the S&P 500 is trading at 6,198 points.
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