Fundstrat’s Tom Lee has launched his subsequent jaw-dropping prediction, which implies excellent news is in retailer for the market within the coming days. The agency’s head of analysis stated in a observe to purchasers on Tuesday that buyers ought to “purchase worry” forward of the Federal Reserve’s rate of interest coverage announcement on Wednesday. Lee stated the broader market is more likely to rise 4% to five% within the 5 buying and selling days following the assembly, with the market pushed greater by small-cap shares. “In brief, we expect the rebound in danger urge for food that started on Wednesday may see the S&P 500 acquire 100 factors,” he informed purchasers. It was the newest in a sequence of great however largely profitable calls by Lee in latest months. as soon as. His feedback about small-cap shares main the rally are in line with predictions earlier this yr that the Russell 2000 index would soar 50% in 2024. Lee stated buyers anticipate small-cap shares to rise at the very least 6% on this rally alone. For reference, the small-cap-heavy index is now up greater than 10% this yr. The inventory has gained 9.5% up to now in July, as buyers have turned to the shares on rising hopes that the Federal Reserve will reduce rates of interest quickly. “We nonetheless assume that is the ‘summer time of small caps,’ so we’re leaning in direction of a purchase,” he stated. A 5% rise would push the S&P 500 to a report intraday excessive, surpassing the report set earlier this month. Based on CME Group’s FedWatch software, federal funds futures are pricing in a larger than 95% likelihood that rates of interest will stay unchanged on the July assembly. However buyers will primarily give attention to indicators that the central financial institution is getting ready to begin reducing rates of interest in September, with federal funds futures buying and selling pointing to a 100% likelihood of easing by then.
