By Teresa Rivas

There haven't been any back to school blues for the stock market this September -- yet.

This month has defied the usual September pattern, helped by atypical upward earnings revisions. On Monday, the S&P 500 and Nasdaq Composite hit their the 25th and 26th record close of the year, respectively, and the latter index is having its best September in 15 years.

Nonetheless, investors may be eyeing those gains warily. A quarter-point interest rate cut is all but assured after the Federal Open Market Committee's meeting concludes on Wednesday, but even if the market gets what it wants, there could be a buy-the-rumor, sell-the-news response. That would come amid ongoing concerns about the job market and the fact that stocks are quite pricey.

Charts, too, show that stocks could be due for a pause.

For starters, we're only halfway through September -- and the back half of the month tends to be the weakest for stocks, notes BTIG managing director and chief market technician Jonathan Krinsky.

"Over the past 20 years, only 2006 and 2017 got through the last five months of the year without a -4% or greater drawdown," he writes, while "16 of the 20 years saw a -4% or larger pullback in September, and of the two that didn't, they saw -7% to -10% pullbacks in August."

(That last point doesn't offer any comfort for this year: The S&P 500 gained 1.9% in August, while the Nasdaq Composite rose 1.6%.)

Ultimately, the fact that stocks had such a strong summer is a double-edged sword. On the one hand, it's led to plenty of profits for investor. On the other, it means that even a completely normal pullback now could feel painful after the rally has come so far and so fast -- and in nearly a straight line upward.

In his analysis, as long as the S&P 500 stays above 6,400, "bulls maintain full control of the market," Krinsky writes. "The issue now is that a pullback to 6,400 would be 3% off the highs, which would represent the largest pullback since April. While that would do nothing to alter the primary trend and momentum of the market, it would likely feel uncomfortable to many who have enjoyed a smooth five-month uptrend."

Therefore, with prices high at a traditionally tricky time of year, investors may be tempted to sell following the FOMC meeting. The fact that the number of S&P 500 stocks above their 50-day moving average peaked in July is another yellow flag.

All of that, along with historical precedent, leads Krinsky to believe that a "September shakeout is still likely."

Investors shouldn't worry too much, however. At current levels, the S&P 500 "reached our year-end price objective of 6,600 ahead of schedule," writes Piper Sandler chief market technician Craig Johnson, who added that he thinks it "may just be a 'pit-stop' before continuing higher during the fourth quarter," leading him to argue any pullbacks are buy-the-dip opportunities.

In other words, a September pause could be a distant memory come December.

Write to Teresa Rivas at teresa.rivas@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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September 16, 2025 12:57 ET (16:57 GMT)

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