Tom Lee, co-founder and long-term bear of Fundstrat Global Advisors who is also a known bull, recently updated his forecast for the S&P 500. He warned of an upcoming 10% drop in the S&P 500.
Lee, despite his traditionally optimistic view on US stocks, has made recent comments that signal an upcoming period of caution for investors. The benchmark index is poised to decline until the end October.
What is likely to hit US stock markets in September?
Lee is concerned about a number of factors which could negatively impact on the S&P 500.
Indicators are performing well. The index has risen by approximately 20 percent since the beginning of this year.
Investors may be nervous and volatile due to the Federal Reserve’s anticipated rate cut in September, and also the upcoming US Presidential elections.
A key concern is the upcoming Bureau of Labor Statistics monthly report on jobs.
Lee says that the disappointing US job numbers could be a catalyst in near term for an upcoming decline of US stocks.
Recent data on nonfarm payrolls for July, which were disappointing, has reignited concerns about a possible economic slowdown.
Stock Trader’s Almanac’s data from 1950 shows that historically, the month of September is a difficult one for the S&P 500. The index has a decline on average of 0.7% each year.
The S&P 500 ended in positive territory seven of eight months out of this year, which highlights the strength of the market.
Should you buy at the bottom?
Tom Lee is optimistic about S&P 500’s long-term prospects despite the risks of the short term.
Investors should view this anticipated drop as an opportunity to buy, rather than cause for panic.
He advises to be “cautious, but prepared to buy when the market dips,” indicating a strategy for investing in this period of potential weakness.
John Stoltzfus’ bullish outlook for the long term is in line with Lee. Stoltzfus expects the market to pull back through October, creating attractive opportunities for investors.
The S&P500 is set at 5,900 for year end, which suggests a potential rise of 6% from the current level.
Oppenheimer’s S&P 500 year-end targets remain among the highest in Wall Street. This reflects the company’s continued belief that the index can deliver solid returns, despite fluctuations.
As new information becomes available, the post Tom Lee warns about potential 10% drop in S&P500: What Investors Should Know may change.
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