The analyst who accurately called the market bottom on March 30th says he believes one sector is poised to lead the next leg higher alongside two of his existing top picks.
In a new CNBC interview, Tom Lee says the red-hot market rally in the past few weeks is being fueled by strong fundamentals alongside moderating risks.
“The market’s rising for the right reasons because it’s rising because the tail risks are abating. We’ve had good fundamentals. In fact, earnings have been good enough that estimates are going up. And the leadership is coming from the groups that we want to see, which has been the Mag 7 and the tech and the cyclicals. And that’s what you want to see if the market is showing economic resilience.”
On his updated sector views, Lee announces a formal upgrade that adds a third pillar to his highest conviction positioning.
“Today, we did raise software, which is also the ETF IGV, to beat, a top pick sector alongside Mag 7 and crypto.”
Lee highlights that his base case is for the S&P 500 to rally to 7,300, with retail investors powering the next leg higher.
“I know strong markets tend to, and I’m going to sound not very original, but strong markets stay strong. So I think the strength that we’ve seen is a good sign. And we also know when we look at the data that institutional investors caught the bottom, but I think in this, in 2026, it’s retail that kind of missed the low. But they have a lot of firepower. So I think it’s going to be a retail-driven buying of stocks. And that’s why I think broadening can take place, because as you know, retail investors do like small and mid-cap stocks as well.”
As of Friday’s close, the S&P 500 is trading at 7,230.
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