Tom Lee, head of research at Fundstrat, predicts the S&P 500 index will hit new record highs by the end of 2025. He believes the market has successfully navigated several major economic challenges.
A “Most Hated” Rally?
Lee describes the current market rally as a “most hated V-shaped” recovery. After a 2025 low of 4,835, the index has rebounded to a new all-time high above 6,200. He points out that many investors sold off stocks earlier this year, missing out on the subsequent surge. He cites the VIX (volatility index) falling below 30 after being above 60 as a sign of a decisive market bottom. Furthermore, he believes that tariffs and inflation haven’t been as damaging as initially feared.
Five Shocks and Still Growing
Lee argues that the S&P 500’s resilience in the face of five major economic shocks over the past five years – the COVID-19 pandemic, supply chain disruptions, inflation, aggressive Fed rate hikes, and tariffs – supports a bullish outlook. He believes the market’s price-to-earnings ratio (P/E) could increase significantly, potentially pushing the S&P 500 as high as 6,600. He uses the analogy of a company that survives multiple attempts to destroy it, implying a higher valuation is warranted.
Current Market Standing
As of Monday’s close, the S&P 500 was trading at approximately 6,198 points.
Disclaimer: This information is for general knowledge and shouldn’t be considered investment advice. Always conduct thorough research and consult with a financial advisor before making any investment decisions.
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