A One-Day Stock Rally Isn’t Enough to Affirm a Turnaround, Tom Lee Says on CNBC

Stocks aren’t going to have it easy moving forward, but that doesn’t mean investors can’t find opportunities, Tom Lee said Thursday on CNBC.

“It’s going to be very challenging,” Lee said on Squawk on the Street with Mike Santoli, Sara Eisen, and David Faber. “Investors were fearful that we were being pushed into the abyss of a depression. There’s a lot of technical damage that isn’t necessarily fixed by just having a one-day rally.”

On Thursday, the S&P 500 fell 5.4% and the Nasdaq Composite tumbled 6.1%, giving up most of its blockbuster gains from a day ago. Even though the broad-sweeping tariffs were paused on most countries for 90 days, investors came to the realization that the hefty tariffs imposed on China will still have an adverse impact on the global trade order, fueling an uncertain economic outlook. 

But Lee believes that tariffs will promote innovation among U.S. companies, which would lead to higher artificial intelligence-related spending. For example, Alphabet this week reaffirmed $75 billion in its capex plans Wednesday despite the tariffs fatigue. That’s one of the reasons why Lee still likes the Magnificent Seven. 

“Companies aren’t gonna get hit as hard as we initially thought,” he said. “To me, there is a ceiling. So even if this is what’s in place now for 90 days, I think there is a chance things could improve from here.”

Subscribe to FS Insight research by Fundstrat to figure which stocks Lee thinks got too washed out in the market turbulence.

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