The stock market’s sharp rebound after a 90-day pause on tariffs was announced Wednesday signals that there is a Trump put, Fundstrat Head of Research Tom Lee said on CNBC with Jon Fortt.
Lee said that the White House is inserting more of Treasury Secretary Scott Bessent in the tariffs talks, and that’s good because he is seen as “less of a hardline view” compared to President Trump’s top trade adviser, Peter Navarro.
The reversal in tariffs policy helped unleash a blockbuster stock rally Wednesday. The S&P 500 climbed 9.5%, its biggest one-day gain since 2008, while the Nasdaq Composite jumped 12% in its second-best day on record. Chip stocks led the way, with Nvidia adding nearly 20% and AMD increasing 24%.
Investors are now closely watching the upcoming earnings season—big banks report this Friday—to figure out how corporate executives plan to wade through this economic uncertainty. Lee is optimistic about earnings because tariffs have been dialed down, which at least means “probation” for companies.
“If they cut guidance or they don’t show guidance, markets can look through it because they know it’s an adjustment process,” he said. “It’s taking the pressure valve off investors panicking on earnings.”
The S&P 500 is now down 7.2% for the year. On Tuesday, it was down over 15% in 2024.
Tom said he likes financials, industrials and small caps, as they all got “massacred” and might be in the process of bottoming out. He is also bullish on the Magnificent Seven, specifically Tesla as its recovery in recent days is exhibit A for what kind of bounce can ensue in the broader markets.
“It’s going to be a change in how markets interpret this, even though it is doing damage to companies,” Lee said.
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