Tom Lee predicts a strong recovery for equities amid tariff chaos
- Equities have begun to demonstrate a V-shaped recovery following a recent sell-off due to tariff announcements.
- The S&P 500 briefly entered bear-market territory before rebounding more than 2% since early April 2025.
- Tom Lee's analysis suggests that despite investor skepticism, there are opportunities for growth in certain large-cap stocks.
In the United States, Tom Lee, co-founder of Fundstrat, has expressed optimism regarding the recent performance of equities after a significant drop caused by President Donald Trump's announcement of steep tariffs. On May 12, 2025, Lee noted that stocks have exhibited a V-shaped recovery pattern after what he described as a 'waterfall decline' resulting from panic selling. Historically, such declines have often led to recoveries rather than further losses, and Lee highlighted the resilience of the market despite persistent skepticism among investors. Following the initial panic that saw the S&P 500 briefly enter bear-market territory, there has been a rally, with the index now showing a more than 2% increase since April 2, 2025, when the tariffs were first proposed. Lee pointed out that this particular market behavior sets a foundation for an eventual recovery. The S&P 500 experienced a significant decrease of at least 20% from its recent high during the panic, but analysts are optimistic about the potential for growth in the coming months. To identify promising stocks in this positive environment, Lee conducted a screening process targeting large-cap stocks with market capitalizations exceeding $15 billion and declines greater than 30% prior to February 18, 2025. He sought companies that did not set new closing lows between April 1 and 8, aligning with the time of Trump's announcement. The research revealed that most analysts supported buy ratings for these selected stocks, forecasting an average gain of approximately 11.5% over the next year. Among the stocks that caught the attention of investors was Super Micro Computer, a tech company that witnessed a nearly 10% increase in its shares despite the overall rough start to 2025. This recovery was further bolstered by a Monday surge of over 4% in the stock's value. In summary, even amid the ongoing trade disruptions and global uncertainties, the overall sentiment remains cautiously optimistic as traders navigate the evolving market landscape.