Tom Lee Suggests S&P 500 Could Break 8200 Level by Year-End

Fundstrat co-founder Tom Lee has forecasted that the U.S. stock market could overcome short-term pessimism and rebound significantly by the end of the year. He explained that while pressures from interest rates and inflation still exist, the market has already reflected considerable bad news. In a CNBC interview on September 15, Lee stated that the Fed's interest rate cuts are likely to be decisions made in response to market pressures, but the stock market could react positively to them. Lee noted that various factors are distorting the current personal consumption expenditures price index, and it could decline by about 1 percentage point over the next six months without Fed intervention. He believes that interest rate cuts could alleviate concerns about further hikes and lead to a decrease in Treasury yields. Additionally, he assessed that the rise of the 10-year Treasury yield to around 5% is a level that the U.S. economy can handle. Regarding corporate earnings, he mentioned that even if the growth rate slows, if organic growth maintains around 10%, the price-to-earnings ratio could approach 20 times. He indicated that S&P 500 corporate earnings could increase by $30 to $50 and emphasized that they have not yet reached their peak. However, he added that the risk of a correction still exists, and political schedules could be a short-term risk factor. The year-end outlook is optimistic, and he stated that the S&P 500 could surpass the 8200 level by year-end.