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"Cream rises. Excellence does have its rewards." ― Anthony Bourdain

Good evening, 

We hope you and your family had a happy and joyous holiday. Stocks ended the week down, continuing a slide that began before the New Year. One obvious question arises: Does this decline signal a turning point for stocks? 

"We don't think so," responded Fundstrat Head of Research Tom Lee. In his view, the tailwinds that helped 2024 gain more than 20% for a second straight year remain in place. In fact, those tailwinds "are arguably stronger in 2025 than they were in 2024," he told us.

One of those tailwinds could come in the form of the ISM Manufacturing PMI. The December reading came out on Friday, reaching a nine-month high. This is a metric Lee and his team are closely monitoring. "ISM manufacturing has been below 50 for 26 months (since Oct 2022), and we think it is set to rise above 50 in 2025," Lee said, with the Federal Reserve in an easing cycle and an incoming White House that is seen as business-friendly. "As we've noted in the past, ISM Manufacturing tends to lead S&P 500 PS growth rates by roughly four months," so "we would see a recovery in ISM to above the 50 mark as a signal for improving EPS growth." This can be seen in our Chart of the Week: