Key takeaways
- On April 15, the S&P 500 reached 7,022.95, breaking the record set on January 28, while the Nasdaq reached an unprecedented high of 24,016.
- Tom Lee confirms that the US market absorbs high oil prices more effectively than its global counterparts, despite the price of crude oil exceeding $100 per barrel after the Strait of Hormuz disturbances.
- Monthly defense expenditures approaching $30 billion are boosting corporate profits and providing economic support amid tensions between the United States and Iran
- Historical patterns suggest that higher oil prices may lead to milder inflationary effects than current market concerns suggest, according to Lee.
- Institutional investors with deep cash are facing pressure to enter markets at record levels, generating new demand – Lee remains firm on his 7,300 point forecast for the S&P 500
The S&P 500 and Nasdaq hit new records this week, recovering from declines linked to escalating tensions between the United States and Iran that have weighed on investor sentiment since late January. The S&P 500 index finished trading at 7,022.95 on April 15, surpassing its previous benchmark as of January 28. Meanwhile, the Nasdaq closed at 24,016, marking a historic milestone of its own.
Fundstrat founder Tom Lee joined CNBC’s Closing Bell to make his point that current market conditions are fundamentally stronger than those that existed during previous 2026 peaks. He provided three distinct justifications supporting this position.
Lee’s opening argument centered on the following: Oil prices. Crude oil prices jumped beyond the $100 threshold after shipping through the Strait of Hormuz was interrupted. While aware of this challenge, he assured me that American markets are overcoming the situation more successfully than their international counterparts.
“The stock market finds itself in excellent shape compared to where we were at the beginning of the year,” Lee said. He stressed that rising energy costs constrain other economies more severely, while US stocks showed flexibility in absorbing these pressures.
Crude oil prices witnessed some decline from peak levels as market participants expected a possible diplomatic solution between Washington and Tehran.
Earnings strength continues
Lee’s second reasoning emphasized the financial performance of companies. He noted that the company’s profitability maintained its momentum throughout the conflict, suggesting that the geopolitical situation actually provided an economic stimulus rather than a hamper for American companies.
Defense sector expenditures play a central role in this dynamic. Lee stressed that monthly defense expenditures currently stand at about $30 billion, with scenarios indicating a possible expansion to $60 billion. This money is circulated directly through the local economy.
He compared the costs associated with oil, estimating that U.S. consumers collectively bear nearly $12 billion a month in higher energy expenditures—resulting in a net economic benefit when compared to defense spending flows.
Technology sector companies posted strong earnings in the first quarter of 2026, often beating analysts’ expectations. These results helped validate the current Nasdaq Price levels.
Concerns about inflation may be exaggerated
Lee’s third point was a challenge to widespread inflation fears. Many market watchers have warned that triple-digit oil prices will lead to broader increases in consumer prices. Show me the opposite point of view.
He explained, “A historical examination of energy price fluctuations reveals that their impact on core inflation measures is less clear than we initially expected.” The inflationary impact is expected to be more modest than current market prices suggest.
The pace of institutional capital deployment is accelerating
Throughout the recent market correction, large institutional capital remained uncommitted as fund managers accumulated cash positions. With stock indices now hitting new records, these investors face increasing pressure to set aside reserves or risk underperformance of their indices.
Lee reiterated his year-end S&P 500 forecast of 7,300, suggesting a potential upside of about 4% from current levels.
Bitcoin, along with other digital assets, is traditionally associated with technology stocks during risky market phases, while blockchain analyzes reveal increased capital flows into institutional Bitcoin investment vehicles throughout recent weeks.
