🕒 Created

Tom Lee Predicts Market Rally Following Potential Soft Inflation Data

Tom Lee stated that the upcoming consumer price index report could serve as a pivot point for markets, potentially triggering a sizable equity rally if inflation figures are softer than expected. The report is expected to show headline inflation rising by 0.4% in August, with core inflation increasing by 0.2% from the prior month. Market sentiment is currently influenced by a global bond-market selloff, rising oil prices, and the ongoing US-Iran conflict. These factors have contributed to a four-day losing streak for the S&P 500, which currently sits 2.7% below its recent record high. The index is currently testing the 7,625 support level, with a sustained break below this point could signal a medium-term decline. Lee noted that while the Federal Reserve's preferred PCE inflation gauge remains high, the CPI has been trending lower. He suggested that even if the Federal Reserve raises interest rates in September, the market may rise on the news because the move has been largely priced in. Additionally, Lee highlighted that significant spending on AI infrastructure is creating a separate challenge for policymakers, as companies continue to justify their spending even as interest rates rise.

Sources

Paywall and unreadable sources