"Wall Street Oracle" Warns: Market "Digestion Period" Is Coming, Big Rally Expected After US Midterm Elections

BlockBeats News, June 5th, Fundstrat strategist Tom Lee said in an interview with CNBC that the current market may be in the midst of a cycle consisting of three stages. As a well-known Wall Street bullish analyst, Tom Lee has accurately grasped the rhythm of the bull market several times in the past few years, but he believes that this round of the market will not rise all the way. As of early June, the S&P 500 index has risen by nearly 11% in the year, despite challenges such as the controversy over the outlook for artificial intelligence and inflation pressure from the rise in energy prices.

Lee believes that better-than-expected corporate profits are the core driver of the market's rise. The market previously expected first-quarter earnings per share (EPS) to be around $70, but the actual result was close to $80. If this trend continues, the full-year EPS is expected to increase by about $40, theoretically providing the S&P 500 index with an additional 800 to 1000 points of upside potential. He expects that the current upward trend is still in the first stage, with the S&P 500 index having a slight chance to rise to about 7700 points in the short term based on a foundation slightly above 7560 points in early June.

However, Lee expects the second stage to arrive soon and last until around October, becoming a "digestion period" for the market. He pointed out that policy uncertainty brought by the new Fed chairman, energy supply shocks, and popular companies' IPOs and unlocks such as SpaceX, OpenAI, and Anthropic could increase market stock supply and put pressure on stock prices, potentially leading to an adjustment similar to a bear market. But he believes that this stage will gradually end after the U.S. midterm elections, with the market poised to resume its uptrend, and he expects 2027 to possibly be "one of the best years experienced by this generation of investors." (Jin10)