MW Why Tom Lee says a face-ripping stock-market rally may have started

By Steve Goldstein

A V-shaped rally for Tesla could carry the S&P 500 higher, says Fundstrat head of research

All stocks needed to do was fall into a correction before investors started bidding them back up again. Monday's rally left the S&P 500 SPX now down only 6% from its mid-February peak.

Tom Lee, the co-founder and head of research at Fundstrat, says the move could mark the start of what he calls a "face ripper rally" with bullish momentum gaining traction.

Exhibit A were the reports that tariffs that'll be announced on what President Donald Trump calls 'Liberation Day,' April 2, will be less severe than feared, even as the president himself tried to put the idea of sectoral tariffs back on the table.

But Lee focused on Trump's roundabout confirmation of the reporting from Bloomberg and Wall Street Journal that the new U.S. round of tariffs will not be aggressively implemented.

"Trump's recent comments signaled that many countries could receive tariff exemptions, confirming suspicions that the administration is primarily focused on negotiating better terms for the U.S.," he says. "This tempering of trade war concerns alleviates one of the major market headwinds that had weighed on equities in recent weeks."

Signs of what he calls a Trump put - the idea that the White House would change policy in the event the stock market fell too much - are emerging, which could lay the groundwork for a V-shaped recovery, he says.

Lee says a strong example could be seen with Tesla $(TSLA)$- more on the EV maker later - whose stock surged 12% on Monday. Lee noted that calls for Elon Musk to step away from his involvement in the Department of Government Efficiency and refocus on Tesla have intensified. Lee says $330 would be a key intermediate level for Tesla, with potential to retest all-time highs if the V-shaped recovery unfolds. And if Tesla does rebound this way, it would support a similar V-shaped move for the S&P 500, he says.

Lee notes the economic calendar is on the light side until Friday, and that technical conditions are improving as volatility collapses.

The markets

U.S. stock futures (ES00) (NQ00) drifted lower after the big 1.8% surge for the S&P 500 on Monday.

   Key asset performance                                                Last       5d     1m      YTD     1y 
   S&P 500                                                              5767.57    2.72%  -3.15%  -1.94%  10.84% 
   Nasdaq Composite                                                     18,188.59  3.91%  -4.40%  -5.81%  11.48% 
   10-year Treasury                                                     4.352      6.20   5.10    -22.40  11.40 
   Gold                                                                 3025.2     0.50%  1.90%   14.62%  39.22% 
   Oil                                                                  69.44      2.90%  -2.07%  -3.38%  -15.31% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Consumer confidence and new-home sales data are due for release.

Tesla sales in Europe slumped 40% in February, according to data from a trade group.

KB Home (KBH) late Monday cut its earnings outlook, saying consumers are moving "slowly in their homebuying decisions."

Trump Media & Technology $(DJT)$ said it will partner with Crypto.com to launch a series of exchange-traded funds.

GameStop $(GME)$ reports results after the close of trade.

A suddenly must-watch Senate Intelligence Committee hearing is due to start at 10 a.m. Eastern.

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The chart

Buy the dip isn't dead, say derivatives strategists at Bank of America led by Riddhi Prasad. Her team says the rebound is on track so far - with the S&P 500 up 4.5% in the seven trading days since March 13, in line with rebounds from similar corrections. The index is just over 1% away from recovering half the drawdown, a feat that has averaged 10 days since 2000, they add.

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.

   Ticker  Security name 
   TSLA    Tesla 
   NVDA    Nvidia 
   GME     GameStop 
   PLTR    Palantir Technologies 
   HOLO    MicroCloud Hologram 
   MLGO    MicroAlgo 
   AMD     Advanced Micro Devices 
   AAPL    Apple 
   TSM     Taiwan Semiconductor Manufacturing 
   AMZN    Amazon.com 

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March 25, 2025 06:27 ET (10:27 GMT)

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