Tom Lee is not optimistic about the stock market’s rise after the Federal Reserve cuts interest rates. On Thursday, the S&P 500 and the Dow Jones Industrial Average hit new records after the Federal Reserve cut interest rates by half a percentage point. Many investors expect the central bank to cut interest rates by just a quarter of a percentage point. “The Fed’s rate-cutting cycle sets the stage for the market to be really strong over the next one to three months,” Lee, head of research at Fundstrat Global Advisors, told CNBC’s “Squawk on the Street” on Thursday. However, Lee added that as the With the U.S. presidential election approaching in November, he is not yet fully convinced that stocks will continue to rise. “I think there’s still a lot of uncertainty about where the stock market will go between now and Election Day,” he said. “That’s why I’m a little hesitant about investors getting involved.” With less than 100 days until the election, every day Uncertainty about each candidate’s economic platform has made some investors hesitant to make big bets on certain stocks and sectors before voting begins. The optimism for 2024 is correct, and there have been multiple bold short trades with long-term call options on the market. He was also one of the first Wall Streeters to be bullish on stocks during the Covid-19 pandemic. Still, he said earlier this month that stocks could fall 7% to 10%. Despite the complex backdrop, Lee said small-cap and cyclical stocks such as industrials and financials will benefit from lower interest rates. A boost to the economy could also push them higher as trading activity picks up.
