A Wall Street psychologist warns: A market "digestion period" is approaching; a major market move is expected after the US midterm elections.

According to Odaily Planet Daily, Fundstrat strategist Tom Lee, in an interview with CNBC, stated that the current market is in a cycle that may be divided into three phases, with the second phase potentially involving a bear market-like correction. Lee is known for his bullish stance and has successfully predicted bull market trends multiple times in recent years. However, this time, he believes the market will not be smooth sailing in the short term. As of early June, the S&P 500 had risen nearly 11% year-to-date, despite challenges such as early-year doubts about the prospects of artificial intelligence and the Iran war pushing up energy prices and leading to inflationary pressures. Lee pointed out that significantly better-than-expected corporate earnings were a key factor driving the market's rise. Previously, the market generally expected first-quarter earnings per share (EPS) of around $70, but the actual figure was around $80. He stated that if this trend continues, it will add approximately $40 to the full-year EPS, theoretically pushing the S&P 500 up another 800 to 1000 points. According to Lee's assessment, the first phase will still favor an upward trend. The S&P 500 is currently slightly above 7560 points as of June 3, 2026. He believes there is still room for upward movement in the short term, potentially reaching around 7700 points. The second phase may arrive soon and become a "digestion period" for the market. In an interview with CNBC, Lee stated, "Between now and October, the market needs to digest multiple factors." He cited sources of pressure including policy uncertainty from the new Federal Reserve chairman, energy shocks (especially shortages of petroleum products and lubricants), and the additional stock supply resulting from the IPOs of companies like SpaceX, OpenAI, and Anthropic, and the expiration of their lock-up periods. (Jinshi)