It’s been a brutal start to the week for stocks, with the S&P 500 down 2.7% on Monday. Fundstrat Head of Research Tom Lee says the “rage selling” has been an overreaction.
“Yesterday really was an indiscriminate selling day,” Lee said on CNBC’s Squawk on the Street with Michael Santoli, Carl Quintanilla, and Leslie Picker. “Investors are reacting to the White House warning of pain ahead, but it has been more of an equity sell-off than it has been in corporate bonds. To us, 4% down days [are] an overreaction.”
Markets have struggled to find their footing in recent weeks, dragged down by tariff worries and other growth scares. The S&P 500 has tumbled 6.7% in March, leading many to question if the index can notch a third year of over 20% gains. (While Lee is constructive on stocks this year, he isn’t so sure about the rally continuing at the same levels.)
Lee reminded investors that this is only the sixth decline of 8% or more noted since 2022, so it is “pretty garden variety” to see a slide of this nature and intensity. However, a decline of more than 10%, to him, would be signal of a coming recession.
For now, he is not jumping the gun and watching the incoming economic data. Economists forecast that consumer inflation rose 0.3% from a month ago in February and 2.9% from a year ago.
“At the end of the day, if we take every headline at face value, then markets are completely paralyzed,” he said. “Of course, that again creates opportunities because at some level, all these stocks are really attractive opportunities.”
Subscribe to FS Insight research by Fundstrat to learn Lee’s thoughts on the White House and the Fed put.
What is FS Insight?
FS Insight is a market-leading, independent research boutique. We are experts in U.S. macro market strategy research and have leveraged those fundamental market insights to become leading pioneers of digital assets and blockchain research.
Tom Lee's View
Proprietary roadmap and tools to navigate and outperform the equity market.
Macro and Technical Strategy
Our approach helps investors identify inflection points and changes in equity leadership.
Deep Research
Our pioneering research provides an understanding of fundamental valuations and risks, and critical benchmarking tools.
Videos
Our macro and crypto videos give subscribers a quick and easy-to-understand audiovisual updates on our latest research and views.
US Policy Analysis
Our 40-year D.C. veteran strategist cuts through the rhetoric to give investors the insight they need.
