Add these concerns to historic performance which tells us that September is the worst-performing month for US stocks—this holds true for the past 10 years, 20 years, and going back to 1950. It is rare to see both August and September finish higher in a post-election year.
This was followed by news today from JP Morgan’s trading desk that US stocks could drop after the Fed meeting on September 17.
Led by Andrew Tyler, the trading team is concerned that after the Federal Reserve’s meeting on September 17, when they are expected to cut interest rates by a small amount, the market might actually drop. This could happen as investors step back to think about several things: new economic data, how the Fed will react to future events, whether too many people are already betting on a rate cut, a decrease in companies buying back their own stocks, and less involvement from individual investors.
Regarding their economic concerns, Tyler and his team believe that with fewer available workers, lowering interest rates could increase the demand for employees. This might cause a more persistent wage inflation. They also note that comments from various companies suggest that more costs from tariffs will likely be passed on to consumers.
On the other end of the spectrum, Wall Street strategists are raising their S&P 500 estimates due to increasing interest in AI and good corporate results. Barclays raised its 2025 year-end target for the S&P 500, for the second time in three months, to 6,450 from 6,050.
This shows a significant divide in where analysts see US equities ending the year and highlights the uncertainties still in play for the remainder of 2025.
In the shorter-term markets will focus on the CPI data release tomorrow before the Fed decision next week, which promises fireworks.
