Stocks Will Rise `Much Higher' This Year, JPMorgan's Lee Says

By Michael Patterson and Carol Massar

Aug. 6 (Bloomberg) -- U.S. stocks will climb ``much higher'' by the end of 2008 as falling commodity prices ease inflation concerns and investors buy shares that dropped the most during the market's sell-off, JPMorgan Chase & Co.'s Thomas Lee said.

``I'm still very confident that we're going to see much higher levels by year-end,'' the chief U.S. equity strategist said in a Bloomberg Television interview. ``We're starting to see these contrarian, out-of-favor sectors come back.''

The New York-based strategist advised clients on June 6 to buy U.S. stocks, saying a surge in the May unemployment rate that sent the S&P 500 down 3.1 percent that day was an ``aberration.'' The index fell another 11 percent over the next five weeks, and the jobless rate climbed to the highest in more than four years in July. Lee, 39, said July 28 that stocks will probably ``bottom'' in the next month and he reiterated his year-end S&P 500 estimate of 1,450, a 13 percent gain from yesterday's close.

Lee's forecast is in line with the 1,454 average projection of nine Wall Street strategists who provide year-end estimates to Bloomberg News.

Crude oil prices dropped almost 20 percent from a record $147.27 a barrel last month.

To contact the reporters on this story: Michael Patterson in London at mpatterson10@bloomberg.net; Carol Massar in New York at cmassar@bloomberg.net