Fundstrat’s Tom Lee expects a 15% Nasdaq rally after the AI-led selloff. Stronger-than-expected US jobs data has lifted bets on a December Federal Reserve rate hike. JPMorgan Asset Management portfolio manager Jack Caffrey called the pullback normal. Neither view rules out further losses for technology shares.
Key Takeaways
- Lee said on November 6 that he would buy the AI stock dip and forecast a 15% Nasdaq rally.
- Caffrey described Nasdaq corrections as normal and cited company order backlogs.
- The Nasdaq Composite rose 1.1% on November 6, but ended the week down 3.4% after Thursday’s selloff.
- October payroll growth was above expectations, and the report lifted bets on a December Fed rate hike.
What happened: the Nasdaq rally call
In a video update on Friday, November 6, Lee called the selloff in AI and chip stocks a buying opportunity. The previous day, the Nasdaq-100 dropped 6.36%. BeInCrypto reported that the decline erased $2.3 trillion in value, with chip and AI stocks among the hardest hit.
Lee attributed investor fears to the possibility that a Democratic “blue tsunami” in Congress could constrain AI and data-center spending. He argued that political pressure might delay projects without stopping them. He also said a split Washington could ease White House pressure on the Federal Reserve.
Lee had floated a 15% to 20% technology-stock rally on November 4, before the selloff. His November 6 case pointed to the Nasdaq-100’s roughly 12% decline from June 30 to early August, followed by a 15% S&P 500 rally, according to BeInCrypto. That earlier sequence does not establish that the same pattern will recur.
Lee, who also chairs Ethereum treasury firm BitMine, cited crypto’s rebound as a sign of a broader bull market. But his Granny Shots US Large Cap ETF was up 7.5% this year, compared with 11.7% for the S&P 500, he said.
Background and context for the Nasdaq rally
On CNBC on November 6, JPMorgan Asset Management portfolio manager Caffrey said Nasdaq corrections should occur “one or two” times a year. He also said companies he had met with reported order backlogs stretching 12, 18 or 24 months, which he described as a long-term earnings story investors could buy into.
The near-term policy outlook is less certain. The US Bureau of Labor Statistics reported that payroll employment rose by 165,000 in October and that unemployment was 4.1%. Payroll growth was well above the roughly 65,000 expected, according to BeInCrypto. The BLS said the average monthly gain over the prior 12 months was 48,000. BeInCrypto reported that the jobs data lifted bets on a December Fed rate hike.
Lee’s thesis also depends partly on lower bond yields and oil prices, BeInCrypto reported. Brent crude traded near $98 a barrel on Thursday. The jobs report and the possibility of a December rate hike are among the factors that could challenge his rebound call. The next Fed rate decision is due in December, according to BeInCrypto.
Market reaction: a bounce, not a recovery signal
The Nasdaq Composite rose 1.1% to 24,579.42 on November 6, but finished the week down 3.4%, the Associated Press reported. On Thursday, it fell 5.5% to 24,315 and stood 11.9% below its record high from the previous month. The S&P 500 dropped 4.4%, its worst day since April 2025, according to the AP.
| Market indicator | Reported move | Date and source |
|---|---|---|
| Nasdaq-100 | Down 6.36% | November 5, BeInCrypto |
| Nasdaq Composite | Down 5.5%, then up 1.1% | November 5 and 6, AP |
| Philadelphia Semiconductor Index | Down 12.25% | November 5, BeInCrypto |
| AMD | Up about 8% after falling 17% | November 6, BeInCrypto |
The rebounds in the indexes and chip stocks do not establish that a lasting Nasdaq rally has begun. BeInCrypto reported that more than 400 S&P 500 stocks fell Thursday. Caffrey said risk managers and margin calls, rather than portfolio managers, drove many trades. His comments point to selling beyond a small group of AI leaders. See the Associated Press account of Thursday’s market selloff.
In a market snapshot dated November 7 at 07:13 UTC, CoinGecko showed Bitcoin up 0.78% and Ethereum up 1.12% over 24 hours. The Crypto Fear & Greed Index was 25, classified as Extreme Fear, on November 7, according to Alternative.me. These figures describe short-term prices and sentiment, not a reliable stock forecast.
What to watch next
BeInCrypto reported that tech analyst Dan Ives had forecast a 10% to 12% fall in the Philadelphia Semiconductor Index following a Democratic sweep. The index dropped 12.25% on November 5. Caffrey’s comments about company backlogs offer a contrasting view of longer-term earnings, while the selloff and the jobs report add uncertainty to Lee’s rebound forecast.
Before the October jobs report, Caffrey said a hot reading would keep the Fed on a path of gradual tightening, according to BeInCrypto. The BLS later reported that payroll employment rose by 165,000. BeInCrypto said the Fed’s next rate decision is due in December. The data and policy outlook could challenge both Lee’s rebound call and the view that this is a routine correction.
Lee said on October 26 that the AI selloff was ending. Ten days later, the Nasdaq slid into correction, according to BeInCrypto. Forecasts can change quickly, and Lee’s 15% rally forecast is not certain. The sharp moves in indexes and chip stocks show that the market remains volatile.
FAQ
Why does Tom Lee expect a Nasdaq rally?
Lee said election-related fears could delay, but not stop, AI and data-center investment. He also cited an earlier market decline followed by a rally, though that history does not establish that the same pattern will recur.
Is the Nasdaq rally confirmed after Friday’s rebound?
No. The Nasdaq Composite rose 1.1% on November 6 but remained down 3.4% for the week, according to the Associated Press. One positive session does not confirm a lasting recovery.
What could undermine the 15% Nasdaq rally forecast?
Lee’s case depends partly on lower bond yields and oil prices, while BeInCrypto reported that the October jobs data lifted bets on a December Fed rate hike. The timing and scale of any rebound remain uncertain.
Sources
- A brutal sell-off for AI stocks sends Wall Street reeling, and the S&P 500 tumbles 4.4% (apnews.com)
- Tom Lee and a JPMorgan Manager Call the AI Rout Normal: Will Nasdaq Rally 15%? (BeInCrypto)
- Tech selloff looks like a normal correction, says JPMorgan's Jack Caffrey (www.usetranscribe.io)
This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrencies are highly volatile; always do your own research before investing.
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