Nasdaq, S&P 500 Futures Pause After Market's Record Run - Strategist Says Sell-Off 'Very, Very Likely'

U.S. stocks appear to be looking jaded after last week's record run that was triggered by the Federal Reserve's rate cut. The major index futures pointed to a lackluster start on Monday as the focus shifted to the next catalysts that can make or break the rally's momentum.

A former JPMorgan strategist cautioned of a potential sell-off materializing. In a post on X, Marko Kolanovic said,“Sell Rosh Hashanah, buy Yom Kippur. Dates are Sep 22nd i.e., this Monday, and October 1st, respectively.” He noted that it coincided with the post-option-expiry reversion effect, the same week, and likely month-end pension fund selling following gains for the month-to-date period.“I would think, selloff is very, very likely.”

As the market looks to digest the recent gains, the Nasdaq 100, S & P 500 and Dow futures fell about 0.30% each, as of 3:50 a.m. ET on Monday. The Russell 2000 futures moved down a more modest 0.24%.

Last week, the market was on a roll, rising ahead of Wednesday's rate decision. Although the rally paused on Wednesday as traders interpreted the central bank's message as hawkish, it resumed in the subsequent two sessions. All the major averages hit new highs on Friday, while the small-cap-focused Russell 2000 managed to scale a new intraday peak, closing just shy of Thursday's all-time high.

For the week ended Sept. 19, the SPDR S & P 500 ETF (SPY), an exchange-traded fund (ETF) that tracks the S & P 500 Index, and the Invesco QQQ Trust (QQQ) climbed 1.24% and 2.16%, respectively. The SPDR Dow Jones Industrial Average ETF Trust (DIA) and the Shares Russell 2000 ETF (IWM) gained 1.08% and 2.23%, respectively.

Carson Group Chief Market Strategist Ryan Detrick views the small-caps' breakout to a new high as a sign that the bull market is likely to have legs. He noted that the small-caps took nearly four years to hit fresh highs, which is the second-longest ever, after the 4.7 years that followed the tech bubble.

In 11 other instances when it took more than a year for small-caps to hit new highs, the market was up three months later, and the average gain was 8%, he said, adding that the average gain a year later was 13.3%.

A Fed speech deluge is scheduled for the week, including one from Chair Jerome Powell on Tuesday. Among the other market-moving data/reports for the week are:

• August personal income and spending report (Friday)
• S & P's flash private sector activity readings (Tuesday)
• Durable Goods Orders Report for August (Thursday)
• weekly jobless claims report (Thursday)

The Fed speakers making public appearances on Monday are:

• New York Fed's John Williams (9:45 a.m. ET)
• St. Louis Fed's Alberto Musalem (10 a.m. ET)
• Fed Governor Stephen Miran (12 p.m. ET)
• Cleveland Fed's Beth Hammack (12 p.m. ET)
• Richmond Fed's Tom Barkin (12 p.m. ET)

Crude oil bounced back early Monday, rising moderately, and gold futures hit new highs in the Asian session.

The 10-year U.S. Treasury note yielded 4.131%, marking a modest pullback from last week, when it rose despite the Fed rate cut. In the currency market, the dollar was mixed against major currencies. Asian stocks closed Monday's session on a mixed note.

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