Veteran stock analyst Tom Lee presents blunt 3-word | World Market Information
When President Donald Trump imposed tariffs in 2018, shares wobbled and the S&P 500 completed the yr down 6.24%.Then the index surged a whole of almost 50% over the next two years.And now one other wave of tariffs is within the offing.💰 Keep forward of the markets: Subscribe to TheStreet’s free each day e-newsletter💸On Feb. 1, much less than two weeks into his second time period, Trump signed govt orders imposing 25% tariffs on imports from Canada and Mexico and 10% on items from China. After negotiations, the tariffs on Canada and Mexico have been deferred. Mexico agreed to deploy 10,000 national guard troops to its northern border to curb drug trafficking, whereas Canada agreed to launch a $1.3 billion border-security plan, together with a “fentanyl czar” and a joint strike power with the united statesStill, the duties on China took impact at 12:01 a.m. EST Feb. 4. Quickly after, China introduced retaliatory tariffs on choose American imports. Inventory buyers reacted to the tariffs: The S&P 500 index misplaced 0.76% on Feb. 3.And now the latest: Efficient March 12 Trump intends to impose 25% duties on imported metal and aluminum. No exceptions, the White Home says.Most economists say that tariffs imposed on imports will immediate firms to raise shelf costs for customers, rising inflation. Will this spherical of tariffs have the identical pressuring impact on the stock market because it did seven years in the past?
‘Tariffs have had more bark than chew,’ financial researcher Tom Lee says.Cindy Ord/Getty Photographs
Veteran Wall Road analyst delivers 3-word message on tariffsTom Lee, head of analysis for Fundstrat and the equity analysis firm’s founder, says the market overreacted to the Trump tariffs and advises buyers to “buy the dip.”Lee is a Wharton graduate who accurately predicted the market rally in 2024. He has been analyzing shares on Wall Road for the reason that early Nineties. The tariffs for Mexico and Canada, which stunned many buyers, are “probably negotiating tactics around the drug war and tightening the border, and it’s been effective,” Lee mentioned.Associated: Morgan Stanley resets rate of interest cut forecast after tariff tussle”It’s a drug war, not a trade war. … [There’d] likely be an overreaction just like DeepSeek last week,” he mentioned, including that the tariffs “have had more bark than bite, meaning they’ve proven to be opportunities for investors to buy,” according to CNBC.Lee also said Trump might well remove the tariffs on Mexico and Canada before May, but he might impose tariffs on the European Union and increase the tariffs on China.Where will the market go from here?Mark Newton, Fundstrat’s head of technical strategy, said “the market’s a lot healthier than what many people would think.””Technically speaking, the market actually looks quite healthy to me. There’s been no break of any sort of meaningful uptrends,” he said. “This entire concern of tariffs actually has not affected the market nearly one iota in phrases of technical construction.” Earnings season is progressing, with six of the Magnificent 7 shares having already reported. Nvidia is set to report Feb. 26.”It’s been a good earnings season so far,” Lee mentioned, although he famous that the Magazine 7 hasn’t been a main driver of beneficial properties. “In fact, they’ve been a drag on the S&P 500 this year,” he mentioned on CNBC.Associated: Analysts reset Apple stock price targets amid earnings, Trump tariffsLee additionally mentioned that small-capitalization shares, although not but a great outperformer, have the potential to “do well this year.” “Outperformers this year come from financial, small caps, industrials,” he mentioned.The Institute for Provide Administration manufacturing buying managers index got here in at 50.9 in January, “and that’s very good news,” Lee mentioned. “It’s the first move above 50 in over 26 months.”The ISM rising above 50 is a bullish signal for industrials as a result of it means manufacturing is growing.”So we do wanna continue to buy the dip,” Lee mentioned. The S&P 500 index is up roughly 3% year-to-date.Associated: Veteran fund supervisor points stark S&P 500 warning for 2025
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