BlockBeats news, on June 5, Fundstrat strategist Tom Lee told CNBC that the current market may be in a cycle composed of three phases. As a well-known Wall Street bull analyst, Tom Lee has accurately timed several bull markets in recent years, but he believes this rally will not rise steadily. As of early June, the S&P 500 index had gained nearly 11% for the year, despite challenges such as controversy over artificial intelligence prospects and inflationary pressures from rising energy prices.
Lee believes that corporate earnings exceeding expectations are the core driver behind the market’s upward movement. The market had anticipated first-quarter earnings per share (EPS) of approximately $70, but the actual result neared $80. If this trend continues, full-year EPS could see an additional increase of about $40, theoretically providing the S&P 500 with an upside potential of 800 to 1,000 points. He expects the current rally to still be in its first phase, with the S&P 500, which stood slightly above 7,560 in early June, having further room to rise to around 7,700 in the short term.
However, Lee expects the second phase to arrive soon and last until around October, becoming a "digestion period" for the market. He noted that policy uncertainty from the new Federal Reserve chair, energy supply shocks, and IPOs and lock-up expirations of popular companies such as SpaceX, OpenAI, and Anthropic could increase equity supply and exert downward pressure on stock prices, potentially triggering a bear-market-style correction. Yet he believes this phase will gradually end after the U.S. midterm elections, after which the market is likely to regain its upward momentum, with 2027 potentially becoming one of the best years ever experienced by this generation of investors. (Jin10)