S&P 500 Expected to Rise 4% in June: Fundstrat’s Tom Lee Highlights 5 Catalysts
Are you ready for another month of stock market gains? According to Tom Lee of Fundstrat, the S&P 500 is poised to rise another 4% in June, following a 5% jump in May. Lee highlighted five catalysts that could drive the stock market higher next month, making it an exciting time for investors.
The first catalyst Lee mentioned is bullish seasonals. Historical data shows that when stocks are up in the first quarter of the year and then see a decline in April, it often leads to strong gains in May and June. With a win ratio of 100% and a median gain of 3.9% in June, the S&P 500 could reach new all-time highs.
The second catalyst is inflation, or rather continued disinflation. Lee expects favorable inflation data points in the coming weeks, which could lead to a decline in inflation and potentially more rate cuts by the Federal Reserve. This could act as a tailwind for stocks in the second half of the year.
The third catalyst is investors’ low utilization of leverage, indicating that market euphoria is not at peak levels. With NYSE margin debt still below its 2021 peak, there is room for more buying power to enter the market.
The fourth catalyst is the record $6 trillion in cash sitting on the sidelines. Lee believes that strong corporate earnings results, like Nvidia’s recent blowout earnings, could encourage investors to finally put that cash to work and buy stocks.
Finally, the fifth catalyst is solid corporate earnings results. With 97% of S&P 500 companies reporting first-quarter results beating consensus estimates, and earnings estimates for the remainder of 2024 slightly rising, the fundamental story of the economy remains intact.
Overall, Lee is bullish on stocks for June and advises investors to “buy the dip (if it comes).” With positive seasonals, inflation trends, low leverage utilization, cash on the sidelines, and strong earnings results, the stock market could see another month of gains. So, keep an eye on these catalysts and get ready for potential opportunities in the market.