Fundstrat's Tom Lee Forecasts 3% S&P 500 Gain in September Amid Anticipated Fed Rate Cut

New York – Tom Lee, Head of Research at Fundstrat Global Advisors, has issued a contrarian forecast, predicting a positive September for the S&P 500 with an expected gain of 3%. This optimistic outlook defies historical seasonal trends and is primarily driven by the anticipated first interest rate cut of the year by the Federal Reserve. Markets are currently pricing in an 88% probability of a 25-basis-point reduction at the upcoming Federal Open Market Committee (FOMC) meeting on September 17.

Lee highlighted that a September rate cut by the Fed has occurred only twice in the past five decades, specifically in 1998 and 2024. In both instances, equities experienced significant rallies, with the S&P 500 climbing 6% in September 1998 and 2% in September 2024. This historical precedent forms the basis of his bullish projection, suggesting a potential counter to the typically negative September seasonality.

Beyond traditional equities, Lee also extended his positive sentiment to the cryptocurrency market, reiterating his prediction that Bitcoin could reach $200,000 by year-end. He emphasized that cryptocurrencies, including Bitcoin and Ethereum, are "super sensitive to monetary policy," making the Fed's easing a crucial catalyst for a significant rally. Recent Bitcoin ETF inflows, totaling $368 million on Monday and $1.1 billion over the last ten days, underscore institutional positioning ahead of the Fed's decision.

While Lee's forecast is notably optimistic, some analysts maintain a cautious stance. They suggest that a 25-basis-point rate cut might already be priced into the market, potentially limiting its upside impact. A more substantial 50-basis-point cut could provide a stronger market jolt, though it might also signal deeper economic concerns.

Fundstrat Global Advisors, an independent financial research firm, is known for providing institutional-grade analysis. Tom Lee, a prominent figure within the firm, frequently shares his market insights across various financial media platforms. His current outlook challenges the consensus, offering a unique perspective on the market's trajectory for the remainder of the year.