Fundstrat's Tom Lee Predicts S&P 500 Could Climb To 7,300 In December: Report

• Lee pointed out that the last time the Fed ended its quantitative tightening program in September 2019, U.S. equity markets rallied more than 17% in the span of three weeks.
• He said he is “pretty bullish” heading into the year-end due to the seasonal tailwind during this time of the year.
• Veteran economist Ed Yardeni stated in his latest note that the markets look set for an early Santa Claus Rally, expecting the S&P 500 to reach 7,000 this week.

Tom Lee, Managing Partner at Fundstrat Global Advisors, reportedly predicted on Monday that the S&P 500 index could rally by nearly 7% from current levels, reaching up to 7,300 in December.

During an interview with CNBC, Lee stated that he remains bullish on equities and cryptocurrencies into year-end. “I think the biggest tailwind that’s going to emerge in the next couple of weeks is around the central bank. The Fed is set to cut in December,” Lee said.

QT End To Boost Markets

He listed the end of the Federal Reserve’s quantitative tightening program, effective December 1, as a tailwind for U.S. equity markets. Minutes of the Federal Open Market Committee’s (FOMC) October meeting revealed that “almost all” policy makers supported the central bank’s plan to halt the drawdown of its balance sheet from December 1.

Lee pointed out that the last time the Fed ended its quantitative tightening program in September 2019, U.S. equity markets rallied by more than 17% in three weeks.

He said he is “pretty bullish” heading into year-end, given the seasonal tailwind.

Santa Claus Rally

Veteran economist Ed Yardeni stated in his latest note that the markets look set for an early Santa Claus Rally, expecting the S&P 500 to reach 7,000 this week. “The S&P 500 rose back above its 50-day moving average last week and now appears to be back on track to hit 7,000 in a year-end Santa Claus rally,” he said.

Ahead of the Federal Open Market Committee’s (FOMC) December meeting scheduled for next week, Fed Chair Jerome Powell is slated to deliver a speech later today.

Fed rate-cut probabilities have also increased ahead of the FOMC meeting. According to data from the CME FedWatch tool, the likelihood of a 25 basis point rate cut next week stood at 87.4% at the time of writing, up from 84.4% a week ago.

At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down by 0.73%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bullish’ territory.

Also See: Eli Lilly Cuts Prices For Weight Loss Drug Zepbound To $299 A Month As It Takes On Novo Nordisk’s Wegovy

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