Fed’s reliance on monthly data might end up hurting stocks, Tom Lee says

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'This should be a benign cutting cycle ... good for markets ... the key is the Fed getting off data dependence,' said Lee.

The stock market's nightmarish start to the August already feels like a distant memory. Since a 3% sell-off on Aug. 5 — sparked by recession fears and the reversal of a popular trade tied to the Japanese yen — the S & P 500 has surged 8.4%. That move puts the benchmark less than 1% below a record high set in July. "It was gut-wrenching, ... but we viewed this, ultimately, as being a growth scare. We didn't think the U.S.

But I think the key is the Fed getting off data dependence, because data dependence is the reason they missed the inflation turn," Lee said. The Fed has for years reiterated it will set monetary policy based on what inflation and labor market data show. But the central bank has been criticized over the past year for keeping rates too high and not easing sooner.

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The market sell-off could be a 'growth scare,' Fundstrat's Tom Lee saysA still-strong consumer, the potential for interest rate cuts and weakening inflation remain Lee's catalysts for a rebound.
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