Tom Lee Predicts S&P 500 Could Jump 250 Points in November as Year-End Rally Builds

Fundstrat’s Tom Lee predicts the S&P 500 might surge 250 factors in November, pushed by fund managers racing to satisfy benchmarks. Over 80% of managers are behind their targets in 2025, establishing a possible efficiency chase by means of year-end.

This prediction comes at a pivotal second for fairness markets. Historically, November favors shares, and regardless of valuation worries, macroeconomic traits enhance optimism.

Fund Managers Drive November Rally Expectations

Lee’s bullish outlook, shared throughout an interview with CNBC, facilities on a “efficiency chase.” Most fund managers are trailing benchmarks in 2025, so late-year shopping for usually will increase as they try to shut gaps. This sample has traditionally lifted returns throughout sturdy seasonal intervals.

The S&P 500 has already staged a swift turnaround in 2025. After dropping over 15% year-to-date in April, the index is now set to finish up by double digits.

This restoration locations 2025 amongst uncommon years, such as 1982, 2009, and 2020, which additionally noticed related reversals. Ryan Detrick noted that every of these years was adopted by one other with double-digit beneficial properties.

Following a six-month rally of twenty-two.8%, historical past reveals that the S&P 500 usually continues to rise. Median three-month beneficial properties after such rallies hit 3.4%, whereas 12-month beneficial properties common almost 10%. This momentum helps Lee’s view of continued upside into 2026.

November is traditionally top-of-the-line months for equities. Since 1927, the S&P 500 has ended greater in 59% of Novembers, the third-strongest file with a mean return of 1.01%.

The Nasdaq 100 and Russell 2000 have posted even higher common beneficial properties of two.47% and a pair of.64% in this era.

When the S&P 500 is up greater than 15% year-to-date coming into November, the index has averaged a 2.7% return.

In the primary 12 months of a US presidential cycle, November has additionally been sturdy, with the S&P 500 rising 67% of the time for a mean of 0.67%. These patterns strengthen Lee’s expectations for extra beneficial properties.

AI and Corporate Margins Offset Macro Headwinds

Lee highlights that company income and margins are rising attributable to beneficial properties from synthetic intelligence throughout many sectors. Even with considerations about tariffs and the Federal Reserve, these fundamentals assist his upbeat outlook. AI is now a big driver of earnings, enabling firms to stay worthwhile throughout financial uncertainty.

Inflation traits additional enhance the optimistic case. Core inflation is dropping sooner than anticipated, and shelter prices have steadied. This eases strain on financial coverage, giving the Federal Reserve extra flexibility and reducing the chances of sharp price hikes that would finish the rally.

Meanwhile, cryptocurrency markets are exhibiting resilience that would complement inventory beneficial properties. Bitcoin and Ethereum are consolidating, however high app revenues and growing stablecoin volumes sign sturdy fundamentals. These traits counsel a potential year-end crypto rally that would elevate investor confidence throughout threat belongings.

Valuation Concerns Persist Amid Optimism

Not all analysts share Lee’s enthusiasm. The S&P 500 now trades at 40 occasions free money stream, solely 25% under the dot-com peak of fifty occasions.

This degree is almost double the present bull market common, elevating crimson flags for some who see stretched valuations just like the late Nineteen Nineties.

CAPE ratios stay elevated, prompting warning amongst value-focused buyers. Lee, nevertheless, counters that sturdy fundamentals and AI-fueled earnings development justify greater multiples. He argues that conventional measures might not totally seize the impression of AI on profitability.

This debate reveals the stress between momentum-driven optimism and valuation warning. While Lee stays assured in near-term catalysts, skeptics warn that high multiples depart little room if situations worsen or earnings fall brief.

As November progresses, the important thing query is whether or not fund managers’ urgency and seasonal momentum will drive the S&P 500 to 7,000.

The consequence will seemingly hinge on company earnings, future inflation information, and Federal Reserve coverage choices in the approaching weeks.

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