Tom Lee Predicts Stock Market Rebound Amid Tariff, Fed Policy Shifts

Tom Lee believes the current market environment bears similarities to 2018, when tariffs rattled stocks — yet he argues key differences today could actually support a stronger recovery, CNBC reports.

What To Know: Lee, head of research at Fundstrat Global Advisors, suggests that a mix of monetary policy and the possibility of tariff resolutions provides a solid backdrop for equities.

"The combination of accommodative monetary policy and tariff resolution potential creates a unique ‘Trump put' and ‘Fed put' dynamic," Lee noted in a market update, according to CNBC. "This dual support mechanism could drive a strong equity rebound once clarity around tariffs emerges."

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Back in 2018, the S&P 500 initially fell 12% following tariff concerns and later plunged 20% after hawkish remarks from the Federal Reserve. However, the index rebounded 28% in 2019 as uncertainties eased. This time, Lee underscores a key difference: "The Fed is currently contemplating more rate cuts, not hikes."

What Else: Lee also points to positive technical indicators. "The S&P 500 is back above its 50-day moving average, and history suggests that rapid drawdowns like the recent one don't last," Lee said.

According to CNBC, futures tied to the Cboe Volatility Index suggest a temporary spike in market fear ahead of the April 2 tariff deadline but a decline afterward.

While risks persist, Lee maintains an optimistic outlook. "The weight of evidence favors resilience and recovery as both monetary policy and market technicals are leaning constructive," he said.

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