By CCN.com: Fundstrat Co-Founder Thomas Lee has been covering the stock market for longer than he’s been analyzing bitcoin. And while crypto has been a tough nut to crack, he’s got a pretty good track record with stocks. Lee’s scorecard bodes well for his latest prediction that the S&P 500 index will reach 3,125 by year-end, which is higher than his previous forecast of 2,925.
So why so bullish? For one thing, stocks have already blown past Fundstrat’s previous target of 2,925 with the S&P currently hovering at 2,940. Also, while many analysts were anticipating a dismal first quarter for earnings, Fundstrat says results were “solid.” As a result, they’re also lifting their 2020 earnings estimates, which is a fly in the ointment to forecasters who suggest companies will miss their growth targets. Not to mention that paltry bond yields have investors hunting returns elsewhere, so it’s risk-on as evidenced not only by a bullish stock market but also in bitcoin.
Fundstrat’s been calling for a “powerful rally once incoming data could prove the resilience of the business cycle.” The stars have now aligned for the S&P 500. Tom Lee is quick to point out that the rally isn’t solely a function of the Fed’s more dovish position on interest rates. He says if they paused and the underlying business data was weak, stocks would never have rallied. But the data stemming from corporate America is underpinning the gains, which is not just a Fed-fueled phenomenon.
Certainly, the narrative has changed in the economy with today’s robust jobs report. The unemployment rate is at its lowest level since 1969, and the economy has been expanding for the past 10 years. This is also a boon for the S&P 500 and the Dow Jones Industrial Average.
“Solid jobs gains shows U.S. resilience and further strengthens case to buy stocks even at new highs,” said Fundstrat’s Lee.
Gerelyn is Assistant Editor at CCN. Based in the U.S., she has also covered institutional investing on Wall Street but caught the bitcoin bug soon after. She resides 13 miles outside of New York, close enough but also far enough away to escape it all. Follow her on Twitter or email email@example.com.
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