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S&P to surpass 2,100 this year: Fundstrat's Tom Lee

Tom Lee: Why fund managers having bad year

With only seven weeks to go, Wall Street strategist Thomas Lee is sticking by his call that the S&P 500 index could continue to rip higher and surpass 2,100 this year.

Thomas Lee
Adam Jeffery | CNBC

Even in the midst of October's lows, as the Ebola epidemic scared investors and technical indicators suggested further downside, the co-founder of Fundstrat Global Advisors remained bullish on the markets.

But Lee, drawing on his 25 years of experience on Wall Street, said Wednesday on "Squawk Alley " that people paid too much attention to the technicals, and he otherwise knew the U.S. would successfully deal with one of the other jitters: the spread of Ebola in the country.

The S&P was trading around 2,037 on Wednesday afternoon.

As 2015 draws near, he sees continued upside.

"We're in a seasonally strong period, so I think the markets will close above our targets," Lee said. "I would say if you feel uncomfortable being long, it's a good sign because that's how bull markets should feel."

Lee played down the rally in utility stocks, typically seen as a bearish sign because investors see the utilities as less volatile. He noted utilities tend to perform well in bull markets, too, and otherwise account for just 2 percent of the S&P.

Lee said it's likely that interest rates will rise next year, especially given the surprisingly strong performance of Treasurys in 2014.

"I think it's going to be a tougher case to be made that rates go lower next year because, you know, there's a lot of pent-up demand, there's a lot of cash on the sidelines," he said. "Europe is stabilizing, China is stabilizing. Things that should make us think more about reflation, not deflation."

A weaker euro and lower oil prices will help Europe's economy rebound in the coming quarters, lifting the stock market, too, he said.