![Fundstrat's Tom Lee Makes Bold Call, Calls for Big Bull Run After Fed](https://news7g.com/wp-content/uploads/2024/07/107326323-1698772881165-IMG_8213-780x470.jpg)
Fundstrat’s Tom Lee has made his next shock prediction — and it spells good news for the markets in the days ahead. In a note to clients on Tuesday, the firm’s head of research said investors should “buy the fear” ahead of the Federal Reserve’s interest-rate policy announcement scheduled for Wednesday. Lee said there’s a good chance of a 4% to 5% move in the five sessions following the meeting, with small-cap stocks leading the market higher. “In short, we see a risk-off rally starting on Wednesday that could add +100 points to the S&P 500,” he told clients. It’s the latest in a series of big but largely successful predictions from Lee in recent months. His note about small-cap stocks leading the rally is in line with his forecast earlier this year that the Russell 2000 would rise 50% by 2024. Lee said investors should expect at least a 6% gain in small-cap stocks in this rally alone. For reference, the small-cap-focused index is now up more than 10% this year. It has been helped by a 9.5% gain so far in July, as investors have moved into these names on growing hopes of an upcoming interest rate cut from the Federal Reserve. “We still see this as the ‘summer of small caps,’ so we favor buying,” he said. A 5% gain would push the S&P 500 to a new intraday high, surpassing the record set earlier this month. Federal funds futures are pricing in a more than 95% chance of no change in interest rates at the July meeting, according to the CME FedWatch Tool. But investors will be watching for signs that the central bank is ready to start cutting in September, and trading in federal funds futures suggests a 100% chance of easing at that point.