The S&P 500 is primed to rise 4% in June, according to a recent note from Fundstrat’s Tom Lee. Lee highlighted five catalysts that could potentially drive the stock market higher next month, providing investors with an optimistic outlook for the coming weeks.
One of the key factors driving this potential increase is bullish seasonals. Lee pointed out that historical data shows that when stocks see a decline in April after a positive first quarter, it often sets the stage for strong gains in May and June. With a win ratio of 100% for stocks rising in June and a median gain of 3.9%, the S&P 500 could reach new all-time highs.
In addition, Lee mentioned that continued disinflation could also contribute to the market’s upward momentum. Favorable inflation data points expected in the coming weeks, such as the release of April Core PCE and May CPI, could lead to a decline in inflation and potentially increase the likelihood of rate cuts later in the year.
Furthermore, low utilization of leverage by investors suggests that market euphoria typically seen at peaks is absent, providing a stable foundation for further gains. The record amount of cash sitting on the sidelines, combined with strong corporate earnings results, could also encourage investors to put their money to work in the stock market.
Overall, Lee’s positive outlook for June suggests that there are multiple factors aligning to support a potential 4% increase in the S&P 500. With the fundamental story of the economy intact and earnings continuing to rise, investors may find opportunities for growth in the coming month.
