September Reality Check: I Expect a 3-5% Correction Despite All-Time Highs

by | Sep 2, 2025

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The market keeps hitting new highs, and I get it — everyone’s feeling good about the momentum. But I’m looking at what’s coming down the pipeline in September, and honestly, I’d be shocked if we don’t see a meaningful pullback.

We’re about to get a reality check that I think most investors aren’t prepared for. The S&P 500 would need to drop just 3.17% to hit its 50-day moving average, QQQ faces a 3.2% correction, the Dow is looking at 2.9%, and the Russell 2000 could see the biggest hit at 5.7%.

These aren’t massive moves, but they’re coming — and the catalysts are lining up perfectly.

The Data Dump That’s Going to Hurt

Non-farm payroll is probably going to be lackluster, CPI data is likely to come in hotter than expected, and Core PCE could surprise to the upside. That’s a trifecta of economic data that’s going to remind everyone that inflation isn’t as tame as the market’s been pricing in.

But here’s what really has my attention: Japanese bond yields hit 3.23% — up from essentially zero not that long ago. When Japan is dealing with yield pressure like that, you know the global bond market is under stress.

The ripple effects are already showing up in our markets, and September’s economic data is going to amplify that pressure.

The Fed Cut That Won’t Actually Help

Here’s the kicker that most people aren’t talking about: the Fed is going to cut rates, but by the end of September, investors are going to realize that the long end of the yield curve isn’t changing.

I think our 10-year yield is headed closer to 4.5%, which means borrowing costs aren’t going to improve despite what the Fed does with the short end.

This disconnect between Fed policy and actual borrowing costs is going to be the September reality check that brings us back to earth. When the market figures out that cheaper money isn’t actually coming, that’s when we see these corrections play out across all the major indices.

Don’t get caught thinking this rally runs forever. The data, the yields and the fundamentals are all pointing to the same conclusion — September’s going to be a wake-up call.

I’ll see you in the markets.

Chris Pulver
Chris Pulver Trading

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