S&P 500 holds near highs, but Fed cuts could spark short-term volatility before medium-term bullish momentum resumes.
The S&P 500 is still hovering near record highs around 6,500, but traders are warning the risk of a “sell-the-news” moment is building with the Fed set to cut rates this week. Technically, the first meaningful pullback target sits at 6,400 — about 3% off the highs — which would mark the biggest dip since April.
Seasonality is another headwind here. September has historically been the weakest month of the year, with 16 of the last 20 years seeing a 4%+ pullback. That history, combined with stretched positioning and fading retail flows, has markets on alert for volatility even if the broader trend remains bullish.
A standard 25 bps cut is fully priced in, but a surprise 50 bps cut could fuel near-term volatility. While it might trigger a knee-jerk “sell the news” reaction, cheaper financing and easier policy ultimately support risk assets.
S&P 500 holds near highs, but Fed cuts could spark short-term volatility before medium-term bullish momentum resumes.
DXY holds near support as traders await FOMC, with three cuts priced and data setting the next move.
Sterling stalls at resistance as soft UK growth data shifts attention to next week’s BoE meeting and balance sheet risks.
