Tom Lee’s Prediction: “2026 Will See Market Surges, Crashes, and Rallies!”

Updated

January 7, 2026

Gambar Tom Lee’s Prediction: “2026 Will See Market Surges, Crashes, and Rallies!”

Jakarta, Pintu News – Tom Lee, head of research at Fundstrat, predicts that 2026 will be a year filled with volatility in the beginning but ending with a strong rise. In an interview with CNBC, Lee described the expected market pattern as “excitement, depression, and rally” compressed into a single year. This analysis draws parallels with 2025, which experienced weakness in the beginning before eventually rising.

A Turbulent Start to the Year

According to Tom Lee, the beginning of 2026 will be characterized by high uncertainty. The market will be testing new policies from the Federal Reserve (Fed), which is likely to be a major cause for concern among investors. However, Lee adds that several factors favor an optimistic outlook, including the annual warning against tariffs and anticipated interest rate cuts by the Fed.

An improvement in the Institute of Supply Management (ISM) index which is expected to be above 50 is also one of the reasons why Lee is optimistic about the second half of the year. This indicator is often considered a barometer of economic health, and an increase above 50 indicates expansion in the manufacturing sector.

Also read: US CPI Data to be Released on January 13, 2026, What Impact on Crypto?

Potentially Superior Sectors

"There’s a lot to be optimistic about in 2026,” says Tom Lee of @Fundsrat:https://t.co/hp2B09KAuM
— Squawk Box (@SquawkCNBC) January 5, 2026

Lee highlighted that energy stocks are among the top sector picks for the year, although the sector has lagged in recent performance. Fundstrat sees significant upside potential in the sector, especially if global economic conditions continue to improve and energy demand increases.

Outside of the tech stocks referred to as the Magnificent 7, Lee also identified the financial sector and small-cap stocks as areas of potential outperformance. While the Magnificent 7 is expected to continue to generate strong earnings growth, other sectors may experience a re-rating which will affect the overall price to earnings (P/E) ratio in the market.

Strong Year-End Outlook

Heading into the year-end, Lee predicts that earnings performance that exceeds expectations will be a major catalyst for the market rally. This is supported by interest rate cuts by the Fed and improvements in other economic indicators. Given these conditions, investors may see 2026 as a year full of opportunities, albeit preceded by uncertainty.

The expected rally will not only be limited to large-cap or technology stocks, but also extend to the financial and small-cap sectors. This diversification in market performance suggests that investment opportunities may be more widely spread than previously thought.

Conclusion

Taking all these factors into account, Tom Lee’s view of the financial markets in 2026 offers a scenario that is complex yet full of potential. For investors, understanding these dynamics and adjusting their investment strategies may be the key to making the most of a turbulent year that ends with optimism.

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