Tom Lee: Expects U.S. Stocks to Enter Bear Market This Year, But Not Before Hitting New High

On March 16, in a recent CNBC interview, Tom Lee said the S&P 500 will continue rising in the coming weeks after narrow fluctuations through most of this year—but the U.S. stock market will enter a bear market later in 2024, even after first hitting a new record high. Lee also warned bearish forces in the market could fully take hold as the year draws to a close. “We expect the downturn to come when the market stops reacting to good news,” Lee noted. “Right now, software stocks, the U.S. market’s ‘Magnificent Seven,’ and crypto have already weathered a bear market—much of the speculation has been squeezed out. Our call is the market will rise before month-end, finish March higher, and could reach 7,300 points. But a bear market may emerge later this year.” On oil prices, Lee explained why a surge would be bullish for stocks: “First, the U.S. is an oil exporter, so our economy benefits from higher oil prices. Second, most other countries are importers—so the U.S. outperforms not just absolutely, but relatively on growth, drawing capital back to the U.S. Third, when global growth is scarce and investors are worried about it, they buy growth stocks. The U.S. stock market is the go-to growth index, so money flows back here from around the world. It’s a rotation story.”