S&P 500 could climb toward 7,300

Veteran strategist Tom Lee believes US markets may be approaching a pivotal turning point — and this time, it’s not just about equities.

Speaking on Closing Bell, Lee outlined a cautiously optimistic scenario where the S&P 500 could advance toward 7,300 as risk-off positioning fades and earnings momentum holds firm.

While markets have recently rotated out of mega-cap tech and into defensive assets like gold, Lee argues the broader bull structure remains intact.

Three trades that could define the rally

According to Lee, three areas stand out as potential leaders:

  • Rotation back into the MAG 7 mega-cap tech stocks
  • A potential bottom in software (notably IGV)
  • Crypto assets

He noted that institutional ownership of software names is sitting at multi-decade lows — a setup that historically precedes sharp rebounds.

Meanwhile, the MAG 7 trade looks comparatively cheap relative to AI infrastructure leaders, creating room for mean reversion.

Crypto drawdowns near “winter” levels

Lee highlighted that crypto markets have already experienced drawdowns approaching 80% of prior “crypto winter” cycles.

That level of retracement, he argues, historically signals high-probability entry points. In past cycles, crypto has often bottomed before broader equity markets, acting as an early risk-on indicator.

If sentiment shifts, digital assets could move ahead of stocks — rather than simply follow them.

Nvidia earnings: The key catalyst

A critical variable in this setup is upcoming earnings from Nvidia.

As a bellwether for AI infrastructure spending, Nvidia’s results could:

  • Reinforce optimism around semiconductors and software
  • Or delay any rotation back into growth sectors

Lee suggested software may be near a bottom, but confirmation depends heavily on how AI-linked earnings perform.

Consumer strength adds support

Outside of tech, consumer discretionary stocks are showing resilience. Technical breakouts in:

  • Restaurants
  • Airlines
  • Homebuilders

suggest market breadth may be expanding beyond mega-cap technology.

Falling mortgage rates — down from nearly 8% to around 6.17% — and stable Treasury yields are helping stabilize housing and services demand.

Lee framed recent outperformance in staples and healthcare as temporary de-risking rather than a structural shift away from growth.

Mean reversion, not a market top

“This is largely mean-reversion after three years of gains,” Lee said, emphasizing that portfolio rebalancing does not necessarily signal the end of the bull market.

Instead, he sees:

  • Rotation-driven volatility
  • Healthy earnings growth
  • Broadening participation

as ingredients for the next leg higher.

What comes next?

If the MAG 7 regains momentum, software stabilizes, and consumer sectors continue to strengthen, Lee believes the S&P 500 could grind higher toward 7,300.

Crypto, already deeply discounted relative to prior cycles, may move first.

The pivot, in Lee’s view, is not about abandoning risk — but about repositioning it.

Summary

Tom Lee sees a potential market pivot forming, with the S&P 500 targeting 7,300. He highlights three leadership trades — MAG 7, software, and crypto — arguing deep crypto drawdowns and sector rotation create a high-probability setup for a broader risk-on rebound.