"Wall Street Oracle" speaks out: Trump's tariffs are "loud thunder but little rain," presenting a buying opportunity for U.S. stocks
Wall Street analyst Tom Lee stated that despite negative factors such as tariffs, the S&P 500 index is expected to perform strongly in 2025, presenting a buying opportunity for investors. Although Trump's tariff proposals have been postponed, the market still shows signs of rebound, especially in industrial and financial stocks. Lee also mentioned that the ISM manufacturing activity index for January has shown expansion for the first time, indicating an improvement in earnings
According to the Zhitong Finance APP, Tom Lee, co-founder and research director of the financial market research firm Fundstrat, known as the "Wall Street Oracle," stated last Friday that despite facing two major "negative shocks," the S&P 500 index is expected to perform strongly in 2025. The S&P 500 index has risen 2.5% so far this year, with gains exceeding 20% in both last year and 2023. Regarding 2025, Lee said, "So far, I think the tariff news we have seen is more of a 'big thunder but little rain,' which means they have proven to be buying opportunities for investors."
U.S. President Trump’s proposal to impose a 25% tariff on Mexico and Canada has been postponed for a month or longer. Meanwhile, China has implemented retaliatory tariffs against the U.S. Last Friday, U.S. stocks fell slightly, partly due to Trump stating he would announce "reciprocal tariff" measures.
Despite being hit by a sell-off at the end of January, the S&P 500 index still rose 2.7% that month. Lee stated, "This is a sign of a rebound, as buying on dips is increasing."
This sell-off in U.S. stocks is attributed to another market "shock": the growing popularity of the Chinese DeepSeek R1 chatbot application, which has disrupted U.S. tech companies with its low-cost artificial intelligence technology.
Lee noted that for the U.S. market, the upcoming January consumer inflation report will provide a "good sanity check" for the market.
According to Lee, the "significant news" last week was that the January ISM Manufacturing Activity Index rose above 50. The Institute for Supply Management reported that this is the first sign of expansion after 26 months of contraction.
Lee stated, "This does indicate that the dispersion of earnings has improved. So I am optimistic about industrial and financial stocks." He also expects that lagging small-cap stocks will eventually perform well.
During the tariff postponement, Mexico and the U.S. will discuss reducing drug and immigrant crossings into the U.S., as well as decreasing the influx of high-performance weapons into Mexico. Canada has stated it will strengthen its previously announced CAD 1.3 billion border security plan, with negotiations ongoing