tl;dr
Fundstrat managing partner Tom Lee predicts a significant rise in the US stock market, citing the Federal Reserve's likely interest rate cuts. This expectation follows the Bureau of Labor Statistics' revised June job growth figures, which dropped from 147,000 to 14,000, indicating labor market softn...
Prominent analyst and Fundstrat managing partner Tom Lee anticipates a significant upside surge in the US stock market. In a recent CNBC interview, Lee highlighted that the Federal Reserve is poised to start cutting interest rates following the Bureau of Labor Statistics’ downward revision of June job growth from 147,000 to just 14,000.
Lee explained that this revised data aligns with the already observed softness in the labor market, creating an encouraging environment for the Fed to adopt a more dovish stance in the upcoming fall. He emphasized that such a pivot would likely stimulate the housing market, which he believes will be a critical driver for economic strength throughout 2026. Lee sees the current market as consolidating before making a substantial move higher.
Shifting the Federal Reserve’s focus from inflation control to unemployment management, Lee noted that excluding housing market data would reveal inflation rates below the 2% target. He pointed out that the unemployment rate, when adjusted for participation rates, stands near 5%, suggesting a growing risk of continued labor market weakness.
Overall, Lee’s analysis suggests that the Fed’s dual mandate is currently tilting away from employment concerns, making rate cuts more likely as the economy braces for a potential cycle of job market softness.