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.”
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