Fundstrat's Tom Lee predicts S&P 500 rising to 5,000 next year in first look at 2022

Published Fri, Nov 5 20211:45 PM EDTUpdated Fri, Nov 5 20213:37 PM EDT

Kevin Stankiewicz @in/kevinstankiewicz @kevin_stank

Strategist Tom Lee told CNBC on Friday he expects the bullish sentiment on Wall Street to continue into next year, suggesting the S & P 500 may leave the 4,000s behind in early 2022. "We're entering the six weeks that matter the most, and then people will start talking about Santa Claus rally," Lee said on "Halftime Report," referring to the market's typically strong performance over the final five trading days of a year and the first two of the new year. Lee's year-end target for the S & P 500 is 4,800. The broad equity index finished Thursday at 4,680. It was trading above 4,700 on Friday, its seventh consecutive positive day. Over the past month, the S & P 500 has been up more than 8%. The benchmark is up roughly 25% year to day. "I think 4,800 is maybe the minimum" year-end level for the S & P 500, said Lee, co-founder of Fundstrat Global Advisors. "I think 5,000 is more of a early 2022, but I think easily 4,800 is achievable. I think seasonals tell us it's 5% or 6% upside from here." The S & P 500 reaching 5,000 would represent an increase of about 6% from its Thursday close. Lee, a closely watched strategist during the Covid pandemic after issuing some timely market calls, listed four reasons Friday why he's been so bullish on stocks even as some investors started to grow cautious: First of all, he said, "Our continued belief that S & P profit margins would surprise because of what we call the 'unkillability.' Businesses survived the worst shutdown in seven generations." "The second is we know there's tons of pent-up demand and if that Covid was alleviating, that would start to be unleashed, and we're seeing that." "The third is relative value because bonds are expensive." "The fourth is, just from a general positioning, many of our clients — not most, but many — are sitting on very uncomfortable cash positions. They've been waiting for that 10% pullback, not that we've been calling it, but they've all had that as a consensus view, thinking the Fed was going to trigger it. Now that it doesn't look like it's happening, that money gets put to work."

Tom Lee

Adam Jeffery | CNBC

Strategist Tom Lee told CNBC on Friday he expects the bullish sentiment on Wall Street to continue into next year, suggesting the S&P 500 may leave the 4,000s behind in early 2022.