- Tom Lee of Fundstrat sees a bullish signal in the market’s sell-off, with the S&P 500’s (SPX) worst day of 2025 reflecting bearish skepticism at highs and record cash reserves, framing it as a buying opportunity despite tariff and slowdown fears.
- He dismisses the University of Michigan consumer sentiment dip as politically skewed – Democrats see inflation spiking, Republicans see it dropping – and suggests the Fed might cut rates sooner if hiring slows, boosting stocks.
- Lee advocates for growth stocks with strong fundamentals as a hedge against volatility, predicting shallow pullbacks like Friday’s will persist as investors buy dips, supported by a potential Fed shift and historical resilience.
Shares of major indices like the Dow (DJIA), S&P 500 (SPX), and Nasdaq (COMP) slipped into the red for February, with the S&P marking its worst session of 2025 so far, yet Tom Lee of Fundstrat Global Advisors, appearing on CNBC’s ‘Closing Bell Overtime,’ sees a silver lining amid the gloom. Lee points to a market brimming with skepticism – evidenced by bearish sentiment at record highs and hefty cash reserves on the sidelines – as a contrarian bullish signal, suggesting that this wall of worry, fueled by tariff fears and economic slowdown concerns, sets up stocks for a rebound. He brushes off the University of Michigan consumer sentiment data, which spooked investors with its broad declines and rising five-year inflation expectations, arguing its political skew – Democrats now see inflation soaring post-election while Republicans see it vanishing – distorts its reliability, a nuance he hopes the Fed recognizes.
Lee acknowledges the turbulence rattling investors, with 63% of his firm’s nearly 2,000 surveyed clients citing tariffs or deportations as top risks, up from 54% last month, yet he frames these as short-term jitters rather than long-term threats. He posits that the Fed, far from being on hold as markets assume, might cut rates sooner if hiring slows amid this volatility—a move that could buoy equities despite two consecutive 20% growth years leaving stocks vulnerable to pullbacks. For Lee, growth stocks remain a smart bet even on shaky days like this, with their structural advantages in revenue, margins, and earnings offering visibility amid macro uncertainty, turning Friday’s dip into a buying opportunity akin to past panics over Deepseek, tariffs, or CPI spikes.
The broader market context reveals a Fed navigating a delicate balance, potentially swayed by economic indicators less politically charged than consumer surveys, while Lee’s optimism hinges on historical patterns of shallow pullbacks and dip-buying resilience in 2025. His “granny shots” or growth stocks – obviously stocks with steady, reliable growth – stand out as a playbook for weathering this storm, appealing to investors wary of volatility but eager for upside. As the S&P hovers around 6,000, a level it’s danced with since late November, Lee’s contrarian take suggests that Friday’s sell-off, rather than a harbinger of doom, could be the setup for the next leg up, provided the Fed acts decisively and investors keep faith in growth fundamentals.
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