Tom Lee Sees Signs of a Bottom for S&P 500 After Index Rises 2.35%

Co-founder and head of research at Fundstrat Global Advisors, Tom Lee, stated that the U.S. stock market likely reached a local bottom after last week's sell-off. The basis for this conclusion was the recovery of major stock indices and changes in the options market. According to the analyst, investor behavior on November 9 indicates a weakening of short-term selling pressure.

On Monday, the S&P 500 rose by 2.35% to 7,549.94 points, marking the best daily performance since April 2026. The Nasdaq Composite added 2.74%, and the Dow Jones Industrial Average increased by 2.15%. Meanwhile, Nvidia shares fell by about 4.3%, despite the broad market recovery, which Lee sees as an example of the indices' resilience to adverse corporate news.

Why Tom Lee Considers the Correction Complete

The main technical argument of the analyst was the normalization of the expected volatility structure of the Cboe Volatility Index (VIX), known as the "fear index." VIX is calculated based on S&P 500 options prices and reflects market participants' expectations regarding index fluctuations over the next 30 days.

During last week's sell-off, the volatility structure was inverted: short-term fluctuation expectations exceeded longer-term ones. This can occur during periods of increased demand for protection against sharp price changes. However, on November 9, the ratio of indicators on a monthly and longer horizon returned to its usual form.

On CNBC, Lee described this change as a characteristic sign of a market bottom forming. In his assessment, the strong recovery of stocks after the wave of sell-offs confirms the assumption that the main selling pressure has already been realized. An additional positive signal, he considers, is the market's ability to grow even when adverse news emerges.

The analyst has previously maintained an optimistic view on U.S. stocks, especially companies related to artificial intelligence. Last week, he viewed the decline in quotes as a buying opportunity, and after the recovery on November 9, he confirmed his position. However, his assessment remains a forecast, as changes in the VIX structure do not guarantee that the market will not update previous lows.

Why Other Analysts Assess the Recovery More Cautiously

Head of macroeconomic research at Charles Schwab, Kevin Gordon, believes that one strong trading day is not enough to assess the state of the entire stock market. He suggests paying attention to market breadth – the number of companies participating in the rise or fall of indices. This indicator helps determine how much the S&P 500's dynamics depend on a few major issuers.

According to Gordon, last week, the equal-weighted version of the S&P 500, where all companies have the same impact on the result, showed more resilience than the standard market-cap-weighted index. By the end of the week, nearly 60% of S&P 500 companies continued to trade above their 200-day moving averages. This means that a significant part of the market maintained long-term resilience despite the decline in some major tech stocks.

Gordon noted that the main pressure during the sell-off was on leveraged positions in the tech sector. While he does not rule out growth expanding to other sectors, he warns that the dynamics of an index heavily weighted by tech giants do not always reflect the state of a typical American company.

Support for the financial sector was also noted by Bank of America Private Bank's Chief Investment Officer, Chris Hyzy. In his opinion, the resilience of bank stocks may indicate the preservation of interest income for credit institutions and prospects for a revival in the corporate deal market. However, these expectations depend on economic activity and financing conditions.

What Could Affect the Future Dynamics of the S&P 500

One of the upcoming tests of the stock market's resilience will be the release of U.S. inflation data. On November 10, the Consumer Price Index (CPI) for October is expected to be released, which could change investors' expectations regarding the Federal Reserve's future policy.

Higher-than-expected inflation could heighten concerns about interest rates and borrowing costs. At the same time, a new wave of growth in short-term expected volatility could once again lead to an inversion of the VIX structure, weakening Tom Lee's argument.

Thus, the recovery of the S&P 500 and changes in volatility indicators provide grounds for a more optimistic market assessment but do not yet confirm the complete end of the correction. Future dynamics will depend, among other things, on the participation of a broad range of companies in the growth and investors' reactions to macroeconomic statistics.