Long-time bull Tom Lee admits he was too upbeat about stocks, saying they've suffered a deeper correction than he thought possible
- Market bull Tom Lee has said he was too optimistic about stocks, saying the sell-off has been much worse than he expected.
- He said stock prices show that investors are expecting a recession, although he said he doesn't think growth will slow sharply.
Long-time market bull Tom Lee has said he was too upbeat about stocks, saying that the start of 2022 has been far worse than he expected.
Lee, a founder of boutique research firm Fundstrat, told CNBC stocks had gone through a "far deeper correction than we thought possible."
He said: "It looks like the market is really bent, especially economic expectations, towards recession. That was not something we expected."
However, Lee said he personally did not think a recession was coming and backed stocks to rebound in the second half.
US and global equities have tumbled in 2022 as investors have digested a cocktail of problems, including central banks' plans to hike interest rates to tame inflation, and the war in Ukraine.
The US benchmark S&P 500 stock index has fallen more than 10% from its January 3 record high, putting it into what's known on Wall Street as correction territory.
The tech-heavy Nasdaq 100 index has suffered even more, falling 20% from recent highs into a so-called bear market, before climbing out as stocks rallied Tuesday.
Lee has long argued the S&P 500 would rally to 5,100 by the end of the year, as inflation cools and growth continues. The index started the year at around 4,795, but has since slumped to 4,262.
He told CNBC Tuesday that stocks were priced as though the US is set to enter a recession. Some analysts have said the Federal Reserve could whack growth by raising interest rates, likely beginning on Wednesday.
But Lee said he doubts Fed monetary policy will hit growth too hard. He said the central bank may in fact carry out fewer interest rate hikes than investors expect, given the uncertainty and widespread economic pain caused by Russia's invasion of Ukraine.
Lee, who was formerly head of US equity strategy at JPMorgan, said he continued to like the look of energy stocks because ensuring oil supplies has become so important to countries over the last two years.