Tom Lee Expects March Rally for Vanguard S&P 500 ETF, Projects 7,700 by 2026
Tom Lee forecasts the S&P 500 will rebound in March, calling February’s AI sell-off a transient risk premium and projecting the index could reach 7,700 by end-2026. He cited Nvidia’s 7.41% decline over five days and warned widening private credit spreads may force the Federal Reserve to adjust rates.
1. March Turnaround Forecast
Tom Lee argues that February’s AI-driven sell-off represents a temporary risk premium rather than fundamental weakness, predicting the S&P 500 will stage a significant rebound in March as investors refocus on long-term growth drivers.
2. Nvidia’s Five-Day Decline
Lee highlighted Nvidia’s 7.41% slide over the past five trading days despite a strong earnings report, suggesting the semiconductor leader will undergo consolidation and rerating before resuming its uptrend.
3. Credit Spreads Pressure Fed
Private credit spreads have continued to widen, prompting Lee to warn that the Federal Reserve may need to reconsider its interest rate path to address mounting stress in credit markets.
4. Gold Outperformance Signals Rotation
Gold has outpaced the S&P 500 for seven straight months, a trend Lee interprets as early evidence of capital rotation and a potential signal of shifting market leadership ahead of the anticipated March rebound.