Economist claims there’s a 90% chance US stock market sunk as low as it will go this year and that S&P 500 could surge by 24% by end of 2022 – but only if inflation or Ukraine war doesn’t trigger a recession
- Tom Lee, managing partner at Fundstrat, said as long as there’s no recession due to a continuation of the war, the S&P could surge to 5,100 by the end of 2022
- Lee believes there’s a roughly 90 percent chance that the market won’t slip below the 4,114 low of February 24, when the invasion began
- The upside would be a 13 percent gain from current levels and a 24 percent rise from the late February nadir
- The S&P 500 has only dipped around 5 percent from where it was in 2021 despite a nearly 12 percent drop early in March
An economist has claimed the US stock market has already hit its lowest point for 2022 after Russia invaded Ukraine – although that war and soaring inflation could prove him badly wrong.
Tom Lee, managing partner at Fundstrat, said that as long as there’s no recession due to a continuation of the war or the 40 year-spike in the cost of living the S&P could surge to 5,100 by the end of the year. As of Sunday night, it sits at 4,545.86 points.
Lee believes there’s a roughly 90 percent chance that the market won’t slip below the 4,114 low of February 24, when the invasion began.
The upside would be a 13 percent gain from current levels and a 24 percent rise from the late February nadir.
‘We think lows for 2022 are in with >88% probability, [but] we still see stocks in a ‘jagged’ recovery in 1H2022. Full risk-on coming in 2H2022, [where the] S&P 500 can exceed 5,100 before year-end,’ Lee told Business Insider.
Tom Lee, managing partner at Fundstrat, said that as long as there’s no recession due to a continuation of the war, the S&P could surge to 5,100 by the end of the year
The low points for the S&P 500 mark the very beginning of Vladimir Putin’s war in Ukraine but the market has since recovered nicely
Inflation in the United States reached a new 40-year high of 7.9% in February in another grim signal for consumers
Lee’s predictions are based on the stock market withstanding inflation, supply chain issues, war in Europe and the continuation of the pandemic – all of which have badly-rattled the economy.
The S&P 500 has only dipped around 5 percent from where it was in 2021 despite a nearly 12 percent drop early in March.
The Dow Jones and NASDAQ have also seen big gains since a February 2022 low when the war in Ukraine began.
President Voloydymr Zelensky’s troops have done a far better than expected job of holding back Vladimir Putin’s far larger army.
But much of the world’s reliance on Russian gas – and sanctions slapped on Putin’s government – have seen energy prices soar.
Inflation hit 7.9 per cent in February, according to the most recent complete figures.
That is the highest level since 1982, with the figure likely to rise even higher in March when the ongoing war in Ukraine is factored in.
Lee pointed to the fact that there have been 31 ‘key reversals’ where the S&P 500 went over six percent below its moving 200-day average and closed above the technical indicator.
The S&P went higher six months later 14 of the 15 times when the United States didn’t go into a recession and was higher in a year’s time in 100 percent of those instances.
That means that even if there were to be a recession, there would be a great chance of stocks rising back up within a year.
The Dow Jones has also seen big gains since a February 2022 low when the war in Ukraine began
The NASDAQ has climbed back above 14,000 after going nearly as low as 12,000 in late February
Lee, an accomplished Wall Street strategist with over 25 years of experience in equity research, is bullish on the market’s rebuild.
‘So, this recovery in equities to close above [the] 200-day moving average generates quite a lot of positive signal,’ Lee said.
Lee adds that there may be some ‘rockiness’ in the very near future, after the next three to four months, things look positive.
‘US still has the best companies and is the most liquid market,’ he said, adding that Latin American countries are also seeing solid performance thanks to their pro-commodity exposure, though Lee called the US ‘the best house in a bad neighborhood.’
Advertisement