Fall Storm: Why a Market Correction May Be Looming

Market Seasonality - September is historically one of the worst months for bullish investors, with the Nasdaq 100 Index ETF (QQQ) showing an average loss of -4.42% in the years it fell during this month [1] - Over the past decade, QQQ has been lower in September in seven instances, averaging a meager gain of 2.57% in the years it rose [1] - Most of the historical weakness in September typically occurs in the latter half of the month [1] Federal Reserve and AI Stocks - The Federal Reserve's anticipated interest rate cut is a significant event for 2025, with market psychology suggesting that investors may "sell the news" following the event [3] - AI-related stocks, including Arm Holdings, Astera Labs, CoreWeave, and Bloom Energy, have experienced substantial gains, with Oracle's shares rising nearly 40% in one week, adding $244 billion to its market cap [3][6] Tariff Uncertainty - The tariffs imposed by the Trump Administration remain a major concern for investors, with uncertainty surrounding their future due to a recent lower court ruling deeming them illegal [7][8] - The case regarding the legality of these tariffs is being fast-tracked to the Supreme Court, with oral arguments set to begin in November [8] - If the Trump Administration loses the case, it could lead to the removal of tariffs and the return of hundreds of billions in tariff revenue, creating further uncertainty in US equity markets [8] Conclusion - Given the historical volatility in September, the potential for a "sell the news" reaction to the interest rate cut and AI stock hype, along with ongoing tariff legal uncertainties, a market correction may be on the horizon [9]