S&P 1,900 possible in 12 months: JPMorgan's Lee

The upside on the S&P 500 index in the next six to 12 months could be 1,800 or even 1,900, Thomas Lee, chief U.S. equity strategist at JPMorgan Chase, told CNBC on Thursday. A move to 1,900 would represent a 12 percent increase from current levels.

USA Today Money section with JPMorgan's Thomas Lee.
Adam Jeffery | CNBC
USA Today Money section with JPMorgan's Thomas Lee.

"I think we'll ultimately slice through those ... pretty easily," Lee said in a "Squawk Box" interview on the day he was profiled on the front of USA Today's Money section as a member of the S&P "1700 Club." (Lee joked about what he called a "silly picture" in the newspaper. "It looks like one of those high school pictures," he added and then re-enacted the pose on set—complete with his hands under his chin.)

Lee upped his official year-end price target for the S&P on July 26 to 1,775. That represents a 12 percent increase from his 1,580 number, which he increased to 1,715 on May 17.

While the major stock indexes are coming off a three-session losing streak, the S&P and the Dow Jones industrial average both set new highs again on Friday.

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"I think it's still profitable to put money to work today," Lee told CNBC, saying support for stocks is coming from "economic momentum" in the U.S. and Europe, "which is finally exiting recession." He added: "There's [also] a really good story on relative value. PEs [price-earnings ratios] can still expand."

But he expressed caution for the rest of August and September because they "are months where markets can be a little more volatile."

One reason for possible volatility this year? Many economists on Wall Street believe the Federal Reserve could start to taper its $85-billion-a-month bond-buying program next month.

"I think tapering is a bigger deal ultimately for rates and for credit than the equity markets," Lee said. "With regard to the new Fed chairman, I think ... that's probably a much bigger issue for the markets actually, in some sense, because it really affects what happens in the next few years."

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While Lee has been consistently bullish on each leg of the stock market's recent increase, he said that "hedge funds, mutual funds and even individual investors" he's met with are looking for "short ideas right now."

By CNBC's Matthew J. Belvedere. Follow him on Twitter @Matt_SquawkCNBC.