Longtime Bull Tom Lee Issues Warning, Says 2026 May ‘Look Like a Bear Market’ – Here’s His New Forecast

Fundstrat’s Tom Lee says he’s not as bullish on 2026 as he has been in previous years.

In a new interview on CNBC, Lee says 2026 might not look so hot, although he’s expecting the S&P 500 to move somewhat higher by the end of the year.

“Next year is a year where we have a Supreme Court potentially overturning tariffs and then a new Fed which will be tested. So I think we could have what looks like a bear market in 2026.”

Lee says he believes the S&P 500 will land around 7,000 at the end of this year and reach 7,700 by the end of next year, for a 10% gain.

“I think there’s a deceleration of what the market can do next year. But that 10% I think belies what will be a very turbulent year similar to this year where we had tariffs and sort of a Fed that became hawkish again…

We exit strong. I mean, even with a with a new Fed, it’s divided obviously, as we learned yet again yesterday, we know from what the president wants to do in terms of who he wants to appoint that the bias is going to be towards easing.”

Lee says he expects tech stocks to move through a period of consolidation at the start of the year, with small caps and financials potentially outperforming.

He says the replacement of Fed Chair Jerome Powell after his term expires in May will ultimately fuel markets.

“I think tech is going to be a group that probably has to digest the prodigious gains made this year into early next year. And we know that whenever tech starts to stall, people wonder is that the leadership ending so the market will fall or is this a rotation…

The real message at the end of the year will be there’s the Fed put back in play. So then you have a White House put and a Fed put which are tailwinds for stocks. But before all that happens, the Fed has to the new chairman has to be confirmed.

It takes about 90 days from the time that his nomination takes place in the confirmation and the markets always test a new Fed chair. So I think that that is the January to October period is that the Fed is being tested even though we know it’s going to be a dovish Fed and a Fed put comes out of that.”

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