The recent sharp fluctuations in U.S. stocks may be nearing a turning point. Tom Lee, founder and head of research at Fundstrat, released a research report to investors on the last trading day of the first quarter, believing that the market has digested most of the downside risks and that the current adjustment has reached over 90% completion.
Lee cited historical data, noting that the S&amp;P 500 typically bottoms out during the early stages of a war, not at its end, as investors tend to price in adverse risks quickly. He also questioned the forecasts of some pessimistic institutions, deeming their outlooks for the S&amp;P 500 as &#34;deviating from reality.&#34;
Comments made by Trump on his Truth Social platform on Tuesday were interpreted by the market as a signal of de-escalation, leading to a 2.9% surge in the S&amp;P 500 to 6528 points that day. Lee stated that the market's rapid reaction precisely illustrates how extremely cautious investors are currently positioned, suggesting that significant upside potential exists once risk sentiment improves.
<h2>Historical Pattern: Early Stages of War Often Present Buying Opportunities</h2>
Lee reviewed seven major conflicts since 1900 and found a significant pattern where the S&amp;P 500 typically bottoms out within the first 10% of the war's duration.
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The logic behind this is that investors are accustomed to &#34;pricing in adverse risks in advance&#34; rather than continuously lowering valuations as events unfold.
Based on this historical pattern, Lee believes the current market situation is analogous to the early stages of a war. Mark Newton, Fundstrat's head of technical strategy, estimates that the S&amp;P 500's cyclical low range is between 6200 and 6300 points.
Lee himself went further, explicitly stating, &#34;We are currently much closer to the bottom than those issuing pessimistic warnings believe,&#34; and predicting a V-shaped rebound after this sharp sell-off.
<h2>Limited Oil Price Impact, U.S. Shows Resilience</h2>
Regarding the market's biggest concern about the impact of high oil prices, Lee holds a relatively optimistic view. He pointed out that the United States, as a net oil exporter, actually benefits from rising oil prices. Even if West Texas Intermediate (WTI) crude rises to $100 per barrel, it would still be significantly below historical highs after adjusting for inflation.
Lee provided specific data to support his claims: the nominal peak oil price in the summer of 2008 was $144 per barrel. However, with cumulative inflation of about 53% since then, WTI would need to rise to the $220 to $240 range to match the historical record in terms of real purchasing power.
In other words, the current oil price of $100 per barrel, after inflation adjustment, remains below the average level for this century.
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Furthermore, Lee added that increased wartime defense spending contributes an incremental $20 to $30 billion per month to GDP, offsetting some of the economic pressure from high oil prices.
<h2>Technical Indicators and Positioning Signals Collectively Point to a Bottom</h2>
Sentiment indicators also provide technical support for Lee's assessment.
He noted that the current put-call ratio for stock options is 0.9, which is comparable to the level seen during the market's cyclical low in April 2025, after the Trump administration announced new tariff policies.
This indicator is typically used as a measure of market fear, and the current reading indicates that investors' defensive sentiment has reached an extreme level, which historically often corresponds to the market's cyclical bottoming areas.
Combining this with the current state of extreme caution in positioning, Lee concluded: &#34;We have completed 90% to 95% of this decline.&#34;

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Wall Street's prominent bull and Fundstrat founder, Tom Lee, points out that the S&P 500 typically bottoms out within the first 10% of a war's duration. Inflation-adjusted oil prices are below the average for this century, limiting the economic impact on the U.S. Combined with the current state of extreme investor caution, he believes that the current adjustment is 90% to 95% complete

- Recent volatility in US stocks may be approaching a turning point, according to Tom Lee, founder of Fundstrat.  
- He cites historical patterns indicating that the S&P 500 typically bottoms out early in conflicts, asserting that most downside risks have been absorbed.  
- Lee's analysis suggests a potential for a V-shaped recovery, supported by technical indicators and the resilience of the US economy against high oil prices.

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"Mega Bull" Tom Lee: U.S. Stocks Tend to Bottom Early in Wars; Current Correction Nearing Its End