August is the month of recovery...Tom Lee "S&P 500, after rebound→correction, will eventually reach 8,000"

▲ U.S. stock market, bull market, bear market/AI generated image

A forecast has emerged that the S&P 500 could rebound to 7,800 in August, undergo a 10% correction, and then surpass 8,000 by year-end.

Tom Lee, founder of Fundstrat, stated in an interview with CNBC on August 3 (local time) that “August will be a month of recovery.” He explained that while the stock market largely stagnated in June and July, corporate earnings forecasts have significantly increased. He added that “the stock market is like a compressed spring,” predicting that the S&P 500 could strongly rebound to 7,800 this month.

Lee diagnosed that a large-scale deleveraging has already occurred amid the liquidation of AI-related positions and instability in the Korean market. He believes that the volatility, where the Dow Jones index plummeted by 1,250 points in a single day and the S&P 500 fell to the 7,200 level, largely cleared excessive market positions. However, he did not withdraw his earlier forecast of a 10% correction. He predicted that the S&P 500 could rise to 7,800, experience a decline of around 10%, and then close above 8,000 by year-end.

Regarding the stock market in 2027, he offered even stronger optimism. Lee said, “The uncertainties that have weighed down the market this year will be resolved, and the market’s test of the new Federal Reserve (Fed) system will also end.” He explained that since a significant portion of deleveraging has already taken place, 2027 could be one of the strongest years in stock market history.

Among the variables supporting an August rebound, he cited slowing inflation. While rising oil prices and tariff burdens are reflected in the Consumer Price Index (CPI), the core drivers of long-term inflation are housing costs and wages, according to his analysis. Lee suggested the possibility of inflation figures coming in lower than expected, noting that housing prices have fallen for three consecutive months and wage growth pressure has significantly weakened.

He also assessed that Leopold Aschenbrenner’s large-scale position liquidation had a significant impact on the sharp decline in the Korean stock market. Lee explained that Aschenbrenner’s managed funds, amounting to $45 billion, could have expanded to approximately $150 billion through leverage. He analyzed that the shock was amplified by tracking funds joining the same trades in the Korean market, which has a large proportion of memory and semiconductor companies like Samsung and Hynix.

[Key Summary of the Article]

-Tom Lee predicted that the S&P 500 could strongly rebound to 7,800 in August.

-Despite the possibility of a 10% correction, he expects the S&P 500 to surpass 8,000 by year-end.

-Upward revisions in corporate earnings forecasts, slowing inflation, and deleveraging were presented as factors supporting an August rebound.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*