Tom Lee told CNBC on Monday that the S&P 500 may rise 100 points after a lighter-than-expected inflation reading this week. “We thought there was sort of a tactical opportunity coming up because last week the market sold off because the jobs report was too strong, yields actually went up, so investors are a little bit [fearing] Fed higher for longer [and are a] a bit bearish this week and I think core CPI could go as low as 0.2 or higher,” Lee, founder and head of research at Fundstrat Global Advisors, said on CNBC’s “Squawk Box.” The June Consumer Price Index is due Wednesday, and economists surveyed by Dow Jones expect the core reading, which excludes volatile food and energy costs, to rise 0.3% from the low. previous month On an annual basis, core inflation is expected to be 5% After a roaring first half, the S&P 500 cooled in July as investors interpreted some strong jobs data to mean the Federal Reserve would resume its rising campaign after a pause in June to close at 4,398.95 Lee’s call would put it at a new year-high near 4,500. 0.2% could be repeated in the coming months, which would show that the Fed is bringing inflation back down close to its annual inflation target of 2%. Lee expects short-term yields to decline, which will help trigger the rally. The 2-year Treasury yield hit a 16-year high last week. The widely followed Wall Street strategist, who was correctly bullish going into this year, recently raised his year-end S&P 500 target to 4,825, which would put the benchmark at a record. That also makes him more bullish than all major investment bank strategists, according to the CNBC Pro survey. The median target there is 4,227. “I think there’s a lot of entrenched skepticism,” Lee told CNBC. “I think some of that will be shattered on Wednesday with the CPI.” Lee noted that gains for S&P 500 companies, excluding the energy sector, are holding up. He defended the circumstantial nature of this particular call by the CPI. “I felt a certain urgency for our clients” after last week’s setback, Lee said. “This might be the first really good news that the Fed can point to and say, ‘That’s why we’re slowing down.'”
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