Tom Lee: Markets are overreacting to the Fed and I would be a dip buyer

The Federal Reserve’s decision to raise interest rates by 25 basis points triggers a sharp market sell-off, though analysts Tom Lee and Dan Greenhaus argue the economy remains resilient enough to absorb the hike. While the stock market's immediate reaction is negative—particularly within the cyclical, financial, and energy sectors—this downturn represents an overreaction rather than a fundamental economic shift. Core PCE inflation is projected to drop toward 2% by year-end as temporary inflationary pressures fade, potentially setting the stage for a significant market rally. Despite the Fed's optimistic view on economic strengthening and robust retail sales, certain sectors like non-residential construction continue to struggle under higher rates. The current market volatility is likely amplified by algorithmic trading rather than a long-term shift in fundamentals, suggesting a "buy the dip" opportunity as earnings revisions remain positive and the consumer stays strong.