S&P 500 May Drop 7% After Rally, JPMorgan Strategist Lee Says

By Alexis Xydias

April 9 (Bloomberg) -- The Standard & Poor’s 500 Index will likely fall to about 780 from last week’s 842.50 close, said JPMorgan Chase & Co.’s top strategist, who cited historical market “corrections” since 1900.

Since the start of the last century, every 20 percent-plus increase within a two-month period in the Dow Jones Industrial Average, another U.S. equities benchmark, was followed by an average decline of 7 percent from the peak, New York-based strategist Thomas Lee wrote in a report dated yesterday.

The S&P 500 has climbed 22 percent from a 12-year low March 9 on speculation the worst of the economic slump is over. The peak of this rebound was reached on April 3, with the measure dropping 2.1 percent this week. The strategist reiterated his forecast that the index may reach its bottom at 750-775 in “coming months.”

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.