Fed Upcoming Meeting Set to Trigger Stock Market Surge

Tom Lee of Fundstrat is forecasting a strong performance for the stock market in the coming weeks, following the conclusion of the Federal Open Market Committee (FOMC) meeting.

Speaking in a recent CNBC interview, Lee noted that although investors are currently cautious due to uncertainty around the upcoming US election, economic indicators still favor riskier assets.

Lee expects that after the FOMC meeting, which is likely to include at least a 0.25% interest rate cut, the markets could perform well for several weeks. He acknowledges the current challenging environment, particularly given the uncertainty about the presidential election, but believes that some positive factors are emerging, such as the anticipated Fed rate cuts and supportive inflation data.

These developments, he suggests, may boost market confidence, leading to strong market performance both during and after the Fed meeting.

In addition, Lee points out that risk assets tend to do well following rate cuts in non-recession periods, as well as after presidential elections. He remains optimistic that regardless of the election outcome, markets are poised to rally in the longer term.

While investors may feel uncertain now, Lee believes that over the next 12 months, they can be confident in market gains, especially given that rate cuts during soft or no-landing economic scenarios almost always lead to positive returns within six to 12 months.

He also highlights that markets historically tend to rally post-election, and the final months of the year could see strong performance, regardless of who wins the presidency.