Key Takeaways
- On April 15, the S&P 500 reached 7,022.95, eclipsing its January 28 high, while the Nasdaq recorded a fresh peak at 24,016
- Fundstrat’s Tom Lee believes the U.S. market is absorbing elevated oil prices more effectively than international markets, even with crude above $100 following Hormuz disruptions
- Monthly defense expenditures near $30 billion are flowing into corporate earnings and providing economic stimulus amid U.S.-Iran tensions
- Historical patterns suggest oil volatility may have a smaller inflationary effect than markets currently anticipate, according to Lee
- Cash-heavy institutional investors are now entering positions to avoid benchmark underperformance—Lee holds his 7,300 S&P 500 forecast
Major U.S. equity benchmarks climbed to unprecedented levels this week, reversing declines stemming from escalating U.S.-Iran tensions that began in January. The S&P 500 finished at 7,022.95 on April 15, breaking through its prior record from late January. Meanwhile, the Nasdaq also set a new milestone, closing at 24,016.
Fundstrat Global Advisors founder Tom Lee joined CNBC’s Closing Bell to outline his thesis for why today’s market foundation is more robust than the highs witnessed earlier this year. He presented three distinct supporting factors.
Lee’s opening argument centered on oil prices. Crude jumped past the $100 mark after shipping lanes through the Hormuz Strait were disrupted. While acknowledging this challenge, Lee emphasized that the American economy is managing the situation more effectively than other nations.
“The market’s underlying health today surpasses where we stood at the start of the year,” Lee stated. He highlighted that while elevated energy costs weigh on global economies, U.S. equities have demonstrated resilience in absorbing this shock.
Crude prices moderated somewhat following their initial spike, as traders priced in potential diplomatic progress between Washington and Tehran.
Earnings Remain Resilient
Lee’s second pillar addressed profitability metrics. He observed that corporate earnings have maintained strength since hostilities commenced, suggesting the conflict has actually provided economic stimulus rather than constraint.
Defense-related expenditures play a central role in this dynamic. Lee highlighted that Washington is allocating approximately $30 billion monthly toward defense operations, with potential expansion to $60 billion. These funds are circulating directly through the domestic economy.
He contrasted this with the oil cost burden, which he calculated at roughly $12 billion monthly for American consumers—yielding a net economic benefit when weighed against defense outlays.
Technology sector participants delivered impressive first-quarter 2026 results, surpassing Wall Street projections in multiple instances. These performances have reinforced current Nasdaq valuations.
Inflation Concerns May Be Overblown
Lee’s third point challenged prevailing inflation anxieties. Numerous market observers have cautioned that triple-digit oil prices will cascade into broader price escalation. Lee disputed this consensus.
“Historical analysis of oil volatility reveals that core inflation metrics respond less dramatically than current expectations suggest,” he explained. His assessment indicates the inflation transmission may prove milder than market pricing reflects.
Sidelined Capital Being Deployed
Throughout recent market volatility, numerous institutional managers accumulated cash positions rather than maintaining full equity exposure. With indexes now establishing new records, these portfolio managers face mounting pressure to allocate dormant capital or accept underperformance relative to their benchmarks.
Lee reaffirmed his year-end S&P 500 projection of 7,300, implying approximately 4% appreciation from present levels.
Digital assets including Bitcoin have traditionally tracked technology equities during periods of increased risk appetite, and blockchain analytics indicate fresh capital flows into institutional Bitcoin vehicles over recent weeks.
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