Tom Lee Says Cooling Inflation Could Give US Fed Room to 'Walk Back Hawkishness' — and That's 'Good For Stocks'

Fundstrat’s Tom Lee stated that cooling inflation data and a shift in rhetoric from the Federal Reserve will benefit equities. A Shift in FOMC Hawkishness In a post on X, Lee offered what he called a “contrarian take” regarding the Federal Reserve’s monetary policy path. Lee noted that New York Fed President John Williams “expects a dovish August core PCE Wednesday 9/30,” referring to the forthcoming Personal Consumption Expenditures price index release. Because of this anticipated data, Lee argued that the Federal Open Market Committee (FOMC) can “walk back hawkishness.” According to Lee, this sequence of events is “good for stocks.” A contrarian take:Fed’s Williams expects a dovish August core PCE Wednesday 9/30– hence, FOMC can walk back "hawkishness"= good for stocks @FundstratDirect @FundstratCap @BitMNR $BMNR $BMNP https://t.co/GLGpqsCd10— Thomas (Tom) Lee (not drummer) FundstratDirect.com (@fundstrat) September 30, 2026 Read Also: Fed Hike Bets Hit 70%: Gold Just Lost The Argument to a 5.2% Treasury Fed Pushes Back on Urgency Lee’s remarks followed Williams’ speech on Sept. 29 speech at the University at Buffalo, signaling a patient approach to future monetary policy. While Williams noted that one further upward rate adjustment might be appropriate “late this year,” he pushed back on the need for immediate action. Stating that the current policy is already restrictive, Williams emphasized that policymakers “have time to gather more information” and “there is no need for urgency.” The final decision, he noted, will rely on “time—and the totality of the data.” Williams’ Economic Outlook Williams detailed the central bank’s current perspective on the U.S. economy, describing the economy’s underlying momentum as “solid and even showing signs of strengthening,” noting that real GDP has grown at about 2% over the past year. To combat elevated inflation, the FOMC recently raised the federal funds rate target range by a quarter percentage point to 3.75 to 4%. While Williams acknowledged that inflation is “unquestionably too high” at 3.7%, he stated that housing service prices have decelerated and inflation expectations “remain well anchored.” How Have Stocks Performed in 2026? The S&P 500 index has advanced 11.84% year-to-date. Similarly, the Nasdaq Composite index was up 15.33%, and the Dow Jones gained 6.13% YTD. On Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 and Nasdaq-100, respectively, closed mixed. SPY fell 0.18% to $764.20, while QQQ rose 0.19% to $737.93. Meanwhile, the Dow tracker, State Street SPDR Dow Jones Industrial Average ETF Trust (NYSE:DIA), ended 0.22% lower at $512.88. In premarket trading on Tuesday, SPY was up 0.31%, QQQ rose 0.32%, and DIA was 0.20% higher. Read Also: Scott Bessent Hires 'Wall Street Geek' David Zervos to Advise Treasury Amid Rising Yields: 'Whether It’s Trade, Whether It’s War, He’s Stepped Up' Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Image via Shutterstock