Why Wall Street's biggest bull sees stock market hitting new record in 2nd half

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Fundstrat's Tom Lee explains in an interview why he upped the ante on his call for a 2023 stock-market rally.

Few Wall Street strategists were looking for a robust rally to kick off 2023 after 2022 went into the books as an exceptionally brutal year.

Now, Lee is even more bullish on the stock market as the second half of the year gets under way. Lee lifted his year-end target for the S&P 500 by 75 points to 4,825 on Monday, which would represent an around 8.4% gain from Wednesday’s level. It would also eclipse the all-time high finish of 4796.56 set on Jan. 3, 2022.

Lee, in a phone interview, told MarketWatch a decline in inflation, especially a downshift in headline consumer-price index toward 3%, could take pressure off the Federal Reserve. Fed Chair Jerome Powell in June warned that policy makers still expect more interest-rate increases this year to combat inflation, with policy makers forecasting two more quarter-point hikes.

The recovery of the stock market this year has been led by megacap technology stocks after the craze around AI started to drive bullish sentiment on tech shares in the second quarter. However, many market participants have questioned the rally’s overreliance on the “Magnificent Seven” cohort, pointing out narrow market breadth that has left the average stock behind.

 

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