Tom Lee , Fundstrat Global Advisors co-founder and head of research, believes that the “indiscriminate selling” in the market on March 10 was an “overreaction,” and it is likely that the Federal Reserve will cut interest rates to address the situation.
Lee, the co-founder and head of research at Fundstrat Global Advisors, made these remarks on a business channel on March 12.
On March 10, the tech-focused Nasdaq Composite index slid 4% in its worst performance in a day since 2022. The Tesla (Nasdaq: TSLA) stock recorded a dramatic decline of 15%, with the "Magnificent Seven" stocks leading the sell-off.
Lee underlined that while the equities have led the sell-off, the corporate bonds have shown endurance.
It is so because the stock market is taking the ongoing tariff war led by President Donald Trump too seriously. The President’s comment about economic pain ahead has also scared the investors.
On the other hand, the bond market looks at it as barely a “growth scare,” Lee added. The bond market is also factoring in a Fed put, given the market conditions.
The Fed put is a belief that the central bank will intervene by cutting interest rates in case the markets record sharp declines in asset prices.
The analyst said that the Fed is in a position to begin rate cuts because, as per him, the inflation pressure is abating. Lee also hinted at a White House put even as he reminded that Trump has not suggested any such action for now.
Nonetheless, Lee didn’t rule out the fear of a recession in the market.
Market rout continues
Meanwhile, the Nasdaq Composite index has failed to recover from the scare and was trading at 17,406.11 points at press time.
For the S&P 500 index, it is the worst week since September 2024. It was exchanging hands at 5,557.75 points at press time.
The picture is equally grim for the Dow Jones Industrial Average index that was trading at 41,063.90 points at press time.