MW Here's the case for equities to 'explode higher' in October. Buy any dips along the way, says JPMorgan.

By Barbara Kollmeyer

Two crucial data points are looming for next month

Why JPMorgan says stocks can explode higher.

Investors seem ready to grab Wednesday's modest pullback seen for the S&P 500 SPX and Nasdaq Composite COMP, in the wake of what was seen by some as a slightly less dovish-than-expected Fed outcome.

One reason for the rebound could be a rethink of Fed Chair Jerome Powell's comment that the 25 basis-point cut was "risk management." To some, the negative read on that was that the Fed saw its move as precautionary and fewer cuts could be ahead. Goldman Sachs has been among those pushing back against this, saying Powell all but flagged an October cut.

Our call of the day comes from JPMorgan's trading desk, who say investors should be ready to buy dips in the stock market, and that a potentially "explosive" moment could be coming for equities.

Led by Andrew Tyler, the trading team said Wednesday's move delivered the "dovish cut that we were looking for," with the Fed mapping out two more to come this year. "These insurance cuts are supportive of the bull case, especially in light of [Tuesday's] retail sales," they wrote, in reference to the stronger-than-expected data.

Tyler and his team then raise the possibility of a data-driven push higher for stocks to come, focusing on two reports: September nonfarm payrolls, due Oct. 3, and consumer price inflation for that month, due Oct. 15.

If the jobs numbers bounce higher after two consecutive poor reports, and inflation "stays contained, look for equities to explode higher after what should be a strong [third-quarter 2025] earnings period," they said. "For those looking for 7K by year-end, this is the first part of the formula."

Tyler and co are referring here to the S&P 500 SPX, which is roughly 4% away from the 7,000 mark. If that data delivers, the stock rally will broaden in the U.S., but then the dollar will also rally, supporting international stocks, notably emerging markets EEM , they predict.

Their dip-buying advice comes even after they noted the Fed's news conference "skewed hawkishly," citing "risk management" comment by Powell. "The press conference does not change our view that any/all dips should be bought with a low conviction view that markets pullback into month-end/quarter-end," said Tyler and his team.

JPMorgan and others have been vocal with warnings about a particularly bad seasonal stretch ahead for stocks - September and October. That said, the retail cohort jumped right into the market to pick up cheap stocks during April's selloff, a move that proved savvy and Wall Street has been playing catch up since.

The S&P 500 has gained 2.17% this month so far, putting it on pace for the highest increase since July 2025, which saw a similar gain. On average, the index has fallen 1.17% in September, according to Dow Jones data.

So one might ask where are the sellers for the fearful September that everyone has been talking about?

JPMorgan's timeline of when stocks could "explode" higher seems pegged to the economic data, but they also talk about a strong third-quarter earnings period, with most of those results not due until the third week of October.

The markets

Stock futures (ES00) (YM00) are higher, led by those for the Nasdaq-100 (NQ00), with Treasury yields BX:TMUBMUSD30Y BX:TMUBMUSD10Y BX:TMUBMUSD02Y pulling back across the curve. Gold (GC00) continues to lose ground post-Fed, as the dollar DXY gains.

   Key asset performance                                                Last       5d     1m      YTD      1y 
   S&P 500                                                              6600.35    1.05%  3.20%   12.22%   17.48% 
   Nasdaq Composite                                                     22,261.33  1.71%  5.14%   15.28%   26.68% 
   10-year Treasury                                                     4.067      3.70   -26.30  -50.90   35.20 
   Gold                                                                 3692       0.51%  9.12%   39.89%   41.36% 
   Oil                                                                  63.78      2.47%  0.47%   -11.26%  -10.32% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Weekly jobless claims are due at 8:30 a.m., and will be closely watched after last week's surprise jump. The Philly Fed manufacturing survey is due at the same time, followed by leading economic indicators at 10 a.m.

Disney $(DIS)$ is pulling late-night host Jimmy Kimmel's show indefinitely after remarks he made over the shooting of conservative activist Charlie Kirk were criticized by members of the U.S. administration.

Cracker Barrel stock $(CBRL)$ is down 9%. Warning of weak traffic, the restaurant chain said it would return to "nostalgia" after a logo change triggered customer backlash.

Novo Nordisk (DK:NOVO.B) (NVO) said a new study shows its Ozempic drug cuts heart attack, stroke and death risk by nearly 25% in older patients.

FedEx $(FDX)$ and Lennar $(LEN)$ results are due after the market close.

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Crypto bros are trying to monetize Charlie Kirk's death,

The chart

The world's investors will keep driving stocks higher, says this chart from a JPMorgan strategy team led by Nikolaos Panigirtzoglou. Despite a record-high allocation to equities by U.S. households, investors globally are far less invested, their chart shows. "Given the continued emergence of 'a new equity culture,' a scenario where the equity allocation by investors globally keeps grinding higher over the next three years toward its previous 2000 peak, would imply 47% equity upside from here," he wrote.

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

   Ticker  Security name 
   TSLA    Tesla 
   NVDA    Nvidia 
   GME     GameStop 
   OPEN    Opendoor Technologies 
   NIO     NIO 
   PLTR    Palantir Technologies 
   AAPL    Apple 
   TSM     Taiwan Semiconductor Manufacturing 
   AMZN    Amazon 
   AMD     Advanced Micro Devices 

Random reads

The once-lost dodo bird is on the comeback trail.

Missing: a 3,000-year-old Pharaoh's bracelet.

-Barbara Kollmeyer

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(END) Dow Jones Newswires

September 18, 2025 06:55 ET (10:55 GMT)

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