By Barbara Kollmeyer
Even powerful retail investors are starting to step back
Stock investors could be facing a “sell-the-news” moment when the Fed meets this month, warns JPMorgan.
Since Fed Chairman Jerome Powell’s comment that a rate-cut could be justified at Jackson Hole last month, the S&P 500 has gained nearly 2%, bringing the year’s total to just over 10%.
Traders now expect three cuts in 2025, starting with a 25-basis point cut on Sept. 17, and several in 2026. Those, many say, could help juice a stock market that has shook off all manner of perceived headwinds this year.
Read: Stock-market bulls are banking on rate cuts as CPI inflation looms
But what if that much-awaited first interest-rate reduction causes stocks to drop? That’s the message from our call of the day as JPMorgan’s trading desk warn clients that a potential selloff could be ahead.
Led by Andrew Tyler, the trading team voiced “concerns that the September 17 Fed meeting which delivers a 25bp cut, could turn into a ‘sell the news’ event as investors pullback to consider macro data, Fed’s reaction function, potentially stretched positioning, a weaker corporate buyback bid, and waning participation from the retail investor.”
Breaking that down starting with macro concerns, Tyler and his colleagues say that with labor supply waning, rate cuts could spark more demand for workers, triggering “sticky” wage inflation. Inflation-related comments from public and private companies suggest “more tariff-induced cost passthrough is coming,” they add.
The Fed’s reaction function is a simply a reference to how a central bank adjusts its policy according to changing economic data. By that, the team is referring to how much inflation the Fed is willing to tolerate at the expense of shoring up the jobs market.
As for “stretched positioning,” the JPMorgan team spoke of “above average, but declining” exposure to U.S. stocks, with hedge funds “small sellers” of North America and Asia Pacific. Citigroup strategists also spoke of easing momentum for U.S. stocks in a note that published Tuesday.
And while share repurchases from S&P 500 companies hit a record in the first half of 2025, Goldman Sachs said that’s been stalling of late, in a note to clients on Monday.
Finally, JPMorgan speaks of “waning” momentum from retail investors, who have been a buy-the-dip force for stocks this year, forcing bigger Wall Street players to catch up. Seasonal factors appear to enter in here, with Citadel Securities strategist Scott Rubner recently pointing out how “retail options volume typically wanes in September before rebounding into the final quarter of the calendar year.”
The sell-off might not last long: Tyler and his colleagues are sticking to a “lower conviction tactical bullish call” on equities, as they say the current bull market for stocks seems “unstoppable.” They see an AI theme re-emerging as a “significant support” for stocks, especially if the Magnificent 7, which hit a new record last week, expands to include Broadcom (AVGO) after its recent impressive results.
One suggestion from Tyler and his colleagues, is that investors may want to consider either adding or upping their gold (GC00) exposure as rate-cut expectations push down the dollar DXY. Goldman Sachs, which expects another 2% gain for the S&P 500 this year, has also advised exposure to gold, through mining stocks.
Read: Fed is almost certain to cut rates by 25 basis points after months of debate. Why are so many people unhappy with that?
The markets
U.S. stocks SPX DJIA COMP are rising, while longer-term Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD30Y are modestly up and oil (CL00) (BRN00) is also gaining. Gold (GC00) has surpassed a record $3,700 an ounce. Elsewhere, French bond yields BX:TMBMKFR-10Y are now the second-highest in the eurozone after the Francois Bayrou-led government collapsed.
Key asset performance Last 5d 1m YTD 1y S&P 500 6495.15 0.54% 1.91% 10.43% 18.72% Nasdaq Composite 21,798.70 1.60% 1.93% 12.88% 29.10% 10-year Treasury 4.064 -19.90 -23.00 -51.20 41.40 Gold 3685.8 2.40% 8.42% 39.65% 44.79% Oil 62.84 -4.24% -0.38% -12.56% -5.23% Data: MarketWatch. Treasury yields change expressed in basis points
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The buzz
The Bureau of Labor Statistics said there were 911,000 fewer jobs created in the 12 months ending in March than previously estimated. A downward revision was expected.
In a mega-mining deal, Anglo American (UK:AAL) agreed to a $53 billion merger of equals with Canada’s Teck Resources (TECK) (CA:TECK.A), with shares of the latter up 23%.
Tourmaline Bio (TRML) stock is up over 50% after Novartis (NVS) said it was buying the U.S. biotech at a near 60% premium.
Nebius shares (NBIS) are up a similar amount after the neocloud company signed a multi-year deal worth $17.4 billion with Microsoft (MSFT). From the archives: The stock market is turning into a casino – raise cash, and also buy this AI company, says strategist
UnitedHealth stock (UNH) is jumping after the healthcare group said in a filing that it expects to have 78% of membership in 4 star or higher plans, in line with its expectations.
Apple (AAPL) is expected to reveal four new iPhones, including a slimmer one, and other products at the “Awe Dropping” event starting at 1 p.m. Eastern.
Oracle (ORCL) (preview here) and Synopsys (SNPS) will report results after the close.
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The chart
From Oxford Economics, is this chart underscoring the U.S. in everything from world trade to the stock market. “It’s unlikely that the U.S. will grow more slowly than other advanced economies for an extended period, in part because a weaker U.S. will drag down other economies,” said lead economist Adam Slater, who forecasts the U.S. economy to grow at a 1.2% to 1.3% rate to close the year.
Top tickers
These were the top-searched stock-market tickers on MarketWatch as of 6 a.m.:
Ticker Security name NVDA Nvidia TSLA Tesla GME GameStop NBIS Nebius Group OCTO Eightco Holdings OPEN Opendoor Technologies NIO NIO AAPL Apple TSM Taiwan Semiconductor Manufacturing AMD Advanced Micro Devices
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-Barbara Kollmeyer
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09-09-25 1011ET
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