Fundstat’s Tom Lee says there are four reasons why the S&P 500 could be setting up for a significant breakout before the year comes to an end.
In a new interview with CNBC, Lee says that strong earnings reports, the Federal Reserve easing up on monetary policy, good news about the government shutdowns and deleveraging may create a perfect storm for stocks.
“We’re entering the sort of critical last 10 weeks of the year at a time when not only earnings are good, but we have a Fed that’s going to be in an easing cycle. I think there’s going to be some good news eventually on the shutdown.
And then we know that there was already a bit of deleveraging that took place about 10 days ago because of that VIX (the Chicago Board Options Exchange’s Volatility Index) spike and the headlines.
And so there’s going to be, I think, a setup for a chase into year end. So I think all of this means that the S&P can close at least at 7,000. I actually think that’s a low number by the end of the year.”
Lee says strides in artificial intelligence (AI) technology will also help businesses, which in turn could help consumers.
“I’m getting the sense that AI visibility has actually improved and I think that there’s actually payback companies are seeing and as they start to think about 2026, that’s a priority for [spending].
So visibility should be improving and then we have potentially lower interest rates next year which is going to put some easing burdens on households and consumers.”
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