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 be aware to shoppers, the agency’s head of analysis mentioned traders ought to “purchase the concern” heading into the Federal Reserve’s rate of interest coverage announcement scheduled for Wednesday. Lee mentioned there’s a excessive chance of a bounce between 4% and 5% over the 5 classes following the assembly, with the market led larger by small-cap shares. “Briefly, we see a risk-on rally beginning Wed that would add +100 factors to the S & P 500,” he instructed shoppers. It’s Lee’s newest in a string of massive, however largely profitable, calls in latest months. His be aware about small caps main the ascent falls consistent with a forecast earlier this yr that the Russell 2000 would surge 50% in 2024 . Lee mentioned traders ought to count on a acquire of a minimum of 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 up to now in July, as traders 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 desire 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 file set earlier this month. Fed funds futures are pricing in a greater than 95% chance that rates of interest stay unchanged on the July assembly, in response to CME’s FedWatch Instrument . However traders shall be primarily anticipating indicators that the central financial institution is able to begin reducing in September, and fed funds futures buying and selling suggests a 100% probability of easing at the moment.
