Tom Lee says the 2022 bear market is over, stocks could hit new highs before year-end

Published Fri, Jul 29 202211:02 AM EDTUpdated Fri, Jul 29 20224:19 PM EDT

The volatile bear market that's rocked stocks for the last few months is over, according to Fundstrat Global Advisors' Tom Lee. The firm's head of research said in a note to clients that recent events signal that the "bottom is in" and that stocks could hit new highs by the end of the year. According to Lee, the reaction to this week's news is promising. Markets got a wave of troubling economic data from a negative GDP print and another aggressive 75 basis point rate hike, yet stocks continued to rally. "This is the August 1982 moment, bottom is in but Fed is two months away from a pivot," Lee wrote. Lee believes similarities exist between now and 1982, when equities bottomed that August — just two months before then Federal Reserve Chairman Paul Volcker ditched his "anti-inflation" agenda, and the market recovered from a 36-month bear run in just four months. Given these comparisons, Lee said stocks could hit new highs by the end of the year, with the S & P 500 breaking back above 4,800. The benchmark hit an intraday record of 4,818.62 in early January. At the same, global companies continue to post solid earnings per share growth despite a surging U.S. dollar and negative GDP print, he added. Lee was among the first Wall Street strategists to initially call the pandemic comeback . He told CNBC in April 2020 that the "faster you fall, the faster you recover," adding that the market typically recovers half of its losses in half the time it took to drop. To be sure, heading into 2022, Lee remained overly optimistic about the market and admitted during an interview with CNBC's "Halftime Report" in March that he had been too bullish . "Our base case for the first half of this year was that stock would be treacherous, but it's been far worse than we expected," Lee said. "It's been a far deeper correction than we expected, but I don't think the contours of the rest of the year change that much." Lee maintains a favorable view on many beaten-up "FANG" names, with Apple in five of the firm's six tactical portfolios and Google parent Alphabet and Microsoft both in four. Those technology names along with Amazon and Meta are also referred to as "granny shot," a designation given to stocks in a minimum of two portfolios.