Tom Lee, the founder and head of research at Fundstrat Global Advisors, predicts a continuation of the rally in US stocks in the first half of 2025, followed by an unwind later in the year.
According to a note published by Lee, he projects the will ascend to 7,000 by mid-2025, indicating a potential 16% increase from Tuesday’s close.
However, Lee anticipates a subsequent retreat to 6,600 by the end of 2025, which would still represent a roughly 9% gain from the current level.
Lee’s analysis is grounded in historical patterns observed following consecutive years with more than 20% returns for US equities. He suggests that the philosophy of holding cash as a strategic asset may be waning, with a trend of investors moving capital from cash and bonds into equities.
He noted that after such back-to-back annual gains, with five instances recorded since 1871, the stock market typically underperforms in the second half of the third year, as evidenced in four out of the five precedents. The exception to this trend occurred in 1996 during the dot-com boom.
The S&P 500 has experienced a robust performance, climbing nearly 27% in 2024 after a 24% ascent in 2023.
The strategist…
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