As US equities approach the Federal Open Market Committee (FOMC) meeting at historic highs, a potential pullback in late September may be on the horizon. With pockets of exuberance forming ahead of the expected first Fed rate cut and the SPX advancing every day last week, investor enthusiasm is building. However, this set-up could lead to a seasonally weak period and the start of the corporate blackout window, similar to 2019. While Fed cuts were bullish for the market in the past, the event itself saw a “better to travel than arrive” pattern.

In 2019, the FOMC meeting led to a late September pullback, with the S&P 500 Index (SPX) experiencing a significant correction. This year, similar factors may be at play, including seasonality and corporate blackout windows. As we approach the FOMC meeting, it’s essential to consider these potential factors that could impact US equities.

One key factor to consider is the seasonal pattern of the market. Historically, September has been a challenging month for US equities, with the SPX experiencing significant declines in the past. This year, the market is approaching all-time highs, which could make it more vulnerable to a pullback.

Another factor to consider is the corporate blackout window. As companies prepare for earnings season, they often implement a blackout period to prevent insider trading and ensure fair disclosure of financial information. This blackout window typically starts in late September and can last several weeks. In 2019, the FOMC meeting coincided with this blackout window, leading to a significant pullback in the market.

While Fed rate cuts have historically been bullish for the market, there is evidence to suggest that the event itself may not be as positive as previously thought. In 2019, the FOMC meeting led to a “better to travel than arrive” pattern, where the market rallied ahead of the meeting but then experienced a pullback after the announcement.

While US equities may be approaching all-time highs, there are potential factors that could lead to a late September pullback. These include seasonality and corporate blackout windows, which have historically impacted the market in September. As investors prepare for the FOMC meeting, it’s essential to consider these potential factors and their potential impact on US equities.