Fundstrat’s Tom Lee Predicts S&P 500 to Hit 6600 Post-Fed Decisions

Financial markets appear poised for significant upside, according to Tom Lee, Managing Partner and Head of Research at Fundstrat Global Advisors, following the Federal Reserve’s impending policy decisions. Despite a prevailing cautious sentiment across the market, Lee’s analysis suggests a strong probability of equity market advancement, drawing parallels to historical patterns where the S&P 500 has consistently demonstrated resilience and growth in the wake of the Fed maintaining benchmark interest rates.

• Fundstrat’s Tom Lee forecasts potential upside for financial markets post-Federal Reserve decisions.
• Historically, the S&P 500 has gained 4-5% within ten trading days after the Federal Open Market Committee (FOMC) held rates steady.
• Market expectations increasingly anticipate Federal Reserve interest rate cuts beginning in autumn.
• Fundstrat projects the S&P 500 could reach 6,600 points by the end of the year.
• Bitcoin’s recent all-time highs are viewed as a significant leading indicator for broader market strength.

Historically, periods during which the Federal Reserve has kept interest rates unchanged have frequently preceded substantial equity market gains. For instance, in past occurrences where the Federal Open Market Committee (FOMC) opted to maintain rates, the S&P 500 (SPX) experienced gains ranging from 4% to 5% within the subsequent ten trading days. Lee anticipates a similar trajectory for the market after the July FOMC meeting, underscoring a potential shift in the prevailing narrative that could favor risk assets.

Market participants are increasingly anticipating the Federal Reserve to initiate interest rate cuts in the autumn. This outlook is largely driven by indicators suggesting that inflation might be transitory and by signs of a partial softening in the labor market. In Lee’s view, this evolving economic backdrop establishes a highly conducive environment for equities, particularly as the central bank’s stance appears to pivot towards potential easing later in the year.

Recent market movements have exhibited some volatility, characterized by intraday declines despite positive open prices. This pattern, described by Fundstrat’s technical chief Mark Newton as a “bearish engulfing” in specific contexts, typically indicates market consolidation following recent gains. Despite these short-term fluctuations, the S&P 500 has recorded a 3% gain in July to date. However, the immediate direction of the market remains highly dependent on critical upcoming data releases: the FOMC meeting on Wednesday and the comprehensive employment report due on Friday will be pivotal for market sentiment and direction.

Despite being characterized by Lee as the “most hated rally,” Fundstrat projects the S&P 500 could reach 6,600 points by year-end. This optimistic outlook is underpinned by several fundamental factors:

Key Supporting Factors for Equity Rally

Approximately $7 trillion in uninvested cash awaiting deployment.

Enhanced regulatory clarity regarding fees, taxes, and deregulation.

U.S. corporations have successfully navigated five key stress tests.

Limited actual economic impact from recent tariff announcements, which are perceived as largely rhetorical.

Adding to this bullish thesis, Bitcoin (BTC) has recently achieved new all-time highs. Lee views this as a significant leading indicator for broader market strength, suggesting that the equity market is likely to follow a similar upward trajectory in the coming months. Furthermore, despite the August 1st deadline for new global tariff agreements, potentially excluding China, Lee does not foresee this as a substantial macroeconomic risk. Notably, hedge funds have increased their short positions, which could amplify any market upward momentum post-Fed decision through short covering.