Strategist Tom Lee says the S&P 500 can reach as high as 7,000 - if two conditions are met

By Steve Goldstein

Tom Lee sees a path for the S&P 500 to reach as high as 7,000.

Strategist Tom Lee is raising his sights on the stock market - if two key conditions are met.

The Fundstrat head of research says he expects the final months of 2025 to be strong.

He said 2025 has been characterized by three phases: tariff fears in the first January to April period; the "most hated" V-shaped rally, from April to now; and a final, new phase that is a dovish Fed and a recovery in the Institute for Supply Management manufacturing index.

"The Fed will finally cut rates, after being on 'pause' for entire 2025 [and] the ISM will finally recover >50, after spending 28-months plus below 50," he said.

(The ISM manufacturing index did in fact marginally move above 50 in both January and February, but has stayed below 51 the last two years.)

Lee did say the path will not be straight and noted his colleague, technical strategist Mark Newton, sees a correction sometime in the fall.

"To us, this makes sense. We just don't know how stocks might initially react to a Fed cut. But once interest rates are reflecting a dovish Fed, this is good for the economy and stocks," said Lee.

Lee's stated year-end S&P 500 SPX target is 6,600. The index finished a turbulent Tuesday at 6,411.37.

-Steve Goldstein

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08-20-25 0638ET