In a recent client video, Tom Lee, head of research at Fundstrat Capital, expressed optimism for the stock market in August, predicting the S&P 500 could reach between 7,900 and 8,000, which would represent an increase of 2.3% to 3.6% from its closing price of 7,723.55.
He noted that the market has been consolidating for the past eight to ten weeks, indicating that a significant breakout could be on the horizon. The S&P 500 has already gained 3.1% this month, reaching all-time highs, largely due to strong second-quarter earnings and hopes for a resolution regarding oil traffic in the Strait of Hormuz.
Technology stocks have been the primary drivers of this advance, with the sector increasing by 5.8% so far in August. Notably, chip stocks have outperformed, with the VanEck Semiconductor ETF rising 5.4% and the Roundhill Memory ETF climbing 6.7%.
Lee highlighted that the Nasdaq-100 index is performing well, trading above its 20-, 50-, and 200-day moving averages, which he views as a positive technical indicator. He remains bullish on semiconductor stocks and anticipates a recovery similar to trends seen in 1997 and 1998, led by major tech players and software.
Additionally, he pointed out that the strong earnings momentum is not only leading to better-than-expected results for the second quarter but is also positively influencing earnings estimates for 2027