Stock Market Forecast for the Week of September 8, 2025

Stock Market Recap and Analysis: September 1– September 5, 2025

Before we look ahead to the stock market forecast for the week of September 8 to 12, it’s worth reviewing last week’s action. The Dow Jones Industrial Average slipped 0.42%, the S&P 500 edged down 0.12%, while the Nasdaq 100 managed a modest 0.19% gain week-over-week. The best performance was recorded by the Russell 2000 (+0.44% WoW), the small-cap stocks.

Analysis of Nasdaq 100 and Russell 2000 Outperformance

Nasdaq 100 (+0.19%)
The Nasdaq 100’s strong showing can be attributed to its significant concentration in technology and growth-oriented stocks. Amid prevailing market uncertainties, key technology firms demonstrated notable resilience. Investor enthusiasm around sectors such asartificial intelligence, cloud computing, and semiconductors continued to drive positive momentum. Additionally, growth stocks’ relatively lower sensitivity to interest rate fluctuations likely contributed to the Nasdaq’s relative strength, particularly in an environment of stable or easing rate expectations.

Russell 2000 ETF (+0.44%)
The Russell 2000’s outperformance appears linked to a rotation toward small-cap stocks, as investors positioned themselves for potentially stronger domestic economic growth or sought undervalued assets. Signs of dovish signals from the Federal Reserve may have favored small caps, which tend to be more sensitive to borrowing costs. Moreover, the index’s diversified exposure across sectors such as communication services, basic materials, and consumer defensive have benefited from a shift in positive market sentiment during this period.

At the start of the week, all three major indexes jumped, buoyed by Labor Department data showing the U.S. economy added just 22,000 nonfarm jobs in August—far below the expected 76,600. This weaker-than-expected report initially pushed bond yields lower as traders ramped up bets on multiple Federal Reserve rate cuts in the coming months. The odds of no rate cuts in September dropped to zero from 3.6%, while a half-point cut entered the conversation at 8%, with a 92% chance now priced in for a quarter-point reduction.

S&P 500 Index Performance by Sector: September 1 – September 5. 2025

Source: Finviz, Ki-Wealth Research

Looking further ahead, markets are pricing in a 67.9% chance of three-quarter-point cuts through December, and even a 5.7% chance of a full percentage point cut, fueling gains in rate-sensitive sectors like real estate and materials. Yet beyond those pockets, broader market momentum faded as the week progressed.

Digging deeper into the employment data, the picture remains one of stagnation. Over the past three months, job growth has essentially flatlined. The diffusion index, which measures the breadth of hiring across industries, has been signaling weakness; fewer than half of industries have expanded payrolls in each of the last five months. Without a clear catalyst, the job market appears stuck.

The U.S. Employment Diffusion Index Findings

Looking at the chart below, the recent data on employment growth in the United States over the last three to five months reveal an inconsistent pattern. While the overall private sector exhibited some modest signs of improvement in July, the manufacturing sector continues to experience weakness. The diffusion index indicates that job increases are concentrated in a limited number of industries, suggesting potential vulnerabilities within the labor market. As a result, policymakers and analysts should approach the headline employment figures with caution, recognizing that they may conceal underlying challenges in specific sectors. That is why I would like to warn investors that the actual rate cut in September might be a “sell the news” stock market reaction.

U.S. Employment Diffusion Index Trend from March to September 2025

Source: Ki-Wealth Research, Federal Reserve Bank of Atlanta

While Wall Street eagerly anticipates rate cuts, the circumstances surrounding those cuts matter just as much. If the economy slips past a point where the Federal Reserve struggles to regain control, then a market priced for an ideal scenario may face sharp disappointments when we look into the coming weeks of September.

Market Forecast: Mixed Signals for the Second Week of September

Today’s stock market mood is cautiously optimistic but mixed, shaped by robust corporate earnings, hopes for monetary easing, and ongoing worries about inflation and a slowing economy. Corporate results have beaten expectations in both Q1 and Q2 of 2025, with the S&P 500’s operating margin hitting 17.9%, close to record highs.

Yet despite these strong fundamentals, investor sentiment remains notably bearish. TheAmerican Association of Individual Investors(AAII surveys) reveal a -15% net bearish sentiment, significantly below historical norms. This gap between fundamentals and sentiment may signal a potential rebound as the market sentiment eventually aligns with the underlying data. Yet, the data from the first week of September indicate growing bearish sentiment among institutional investors.

AAII Bull Bear Sentiment Analysis

In August, small-cap and value stocks led the pack, with small caps still trading at a 15% discount to fair value. Their strength continued into early September. The key question now is whether small caps will continue to outperform based on fundamentals or if they will face pressure from tariffs and inflationary risks.

Sectors such as communications, real estate, energy, andhealthcareappear undervalued and present attractive opportunities—housing stocks, in particular, deserve a closer look. Meanwhile, the utility sector slipped in August despite lower interest rates, underscoring its stretched valuation.

On the macroeconomic front, several key data points warrant close attention. The U.S. Producer Price Index (PPI) for August could influence the Federal Reserve’s stance on interest rate cuts. September 11 will be a critical day with the release of U.S. Consumer Price Index (CPI) data for August; persistent inflation might complicate the Fed’s easing plans despite their current focus on employment. That same day, the European Central Bank’s decision on interest rates is expected, with no rate changes currently priced in by the market. Finally, Michigan Consumer Sentiment data at week’s end will offer insight into consumer confidence and spending, factors poised to impact retail and consumer discretionary sectors.

Economic Events For the Week of September 8 – September 12, 2025

Watch For Developments in U.S. Tariffs and Government Funding Risks

In 2025, there has been a marked escalation in the use of tariffs by the U.S. administration under President Trump. Utilizing emergency authorities granted by theInternational Emergency Economic Powers Act (IEEPA),Section 232 of the Trade Expansion Act, and Section 301 of the Trade Act of 1974, the administration has broadened tariff impositions significantly.

As of today, the key measures include:

• Imposition of 25% tariffs on the majority of goods imported from Canada, Mexico, and China, with a reduced rate of 10% applied to potash and energy products.
• Establishment of a 10% baseline tariff on most global imports, alongside higher tariffs ranging from 25% to 50% targeting steel, aluminum, and automobile sectors.
• Continuation of investigations into critical industries such as semiconductors, pharmaceuticals, drones, and essential minerals.
• Retaliatory tariffs enacted by multiple countries in response to U.S. measures, affecting the export landscape.

These developments have introduced considerable uncertainty into global supply chains, contributing to market volatility and affecting investment decisions. Notably, importers accelerated shipments in the first quarter of 2025 ahead of tariff implementations, resulting in a significant decline in imports during the second quarter. Upcoming negotiations with the European Union, Japan, and Southeast Asian nations hold potential to adjust existing tariff frameworks.

Concurrently, the risk of a U.S. government shutdown looms as federal funding is set to expire on September 30, 2025. Congress faces the imperative of passing a continuing resolution to maintain government operations.

Political dynamics complicate the funding outlook. Republicans have advanced a major tax and spending cut package absent Democratic backing. President Trump’s effort to rescind $4.9 billion in foreign aid has further complicated bipartisan negotiations. Democrats are pressing for the restoration of Medicaid and rural hospital funding as conditions for their support.

In the immediate term, debates over a short-term continuing resolution are expected, with an increasing probability of a government shutdown. Such an event would result in federal worker furloughs, service delays, and could negatively impact the fourth quarter GDP performance. Both parties are preparing for political contention surrounding the shutdown’s consequences.

Federal Reserve Regulatory Authority and National Housing Emergency

Federal Reserve Regulatory Authority

The Federal Reserve continues to hold its regulatory powers despite ongoing speculation to the contrary. While the institution retains its authority, there is a noticeable shift in its regulatory agenda under new leadership. Several key proposals are currently in progress:

• Stress Testing Volatility: The Fed plans to finalize new rules by September aimed at enhancing the robustness of stress tests.
• Transparency in Capital Buffers: A proposal focused on increasing clarity around capital requirements is expected to be released this month.
• Basel III Revisions: In collaboration with the FDIC and OCC, a joint proposal addressing Basel III standards is anticipated by the end of the year.

The Federal Reserve is navigating pressures from both major political parties, with some advocating for stricter oversight and others for deregulation. Although no formal legislation has been introduced to remove the Fed’s regulatory role, executive pressures are intensifying.

National Housing Emergency

The administration is considering a declaration of a national housing emergency this fall, as confirmed by Treasury Secretary Scott Bessent. This initiative aims to address challenges in housing supply and affordability.

Potential measures under consideration include:

• Exempting construction materials from tariffs.
• Standardizing zoning regulations and building codes to streamline development.
• Reducing closing costs and providing consumer tax credits to facilitate home purchases.
• Utilizing federal land for housing development projects.

Declaring a national housing emergency would enable the President to bypass Congress through emergency powers. While economists caution that such measures may assist builders, significant improvements in housing affordability are unlikely to occur immediately. However, if mortgage rates decline as expected, this could encourage increased construction and home sales by 2026. Top picks from the home builders and construction stocks could present attractive investment opportunities for investors.

Outlook for the Week and Beyond

Source: Ki-Wealth Research

S&P 500 Weekly Trading Outlook: Key Levels and Strategy

As we examine the trading setup for the S&P 500 this week, the outlook suggests limited upside potential unless unexpected positive developments emerge. The index has recently traded within a narrow range of 6,445 to 6,481, reflecting subdued volatility.

S&P 500 Index Technical Chart Analysis, September 7, 2025

Source: Ki-Wealth analysis, Trading View

Immediate support levels to watch include:

• 6,365: A recent dip-buying area that has provided short-term support.
• 6,300: A potential pullback target that remains consistent with the broader upward trend.
• 6,200: A strong support level that also serves as a psychological floor.
• 6,100–6,150: The zone around previous record highs, offering long-term support.

On the resistance side, key zones are:

• 6,491–6,543: A critical pivot area aligned with the underside of a broken trendline.
• 6,500: A psychological barrier.
• 6,515: The 127.2% Fibonacci extension of the February to April downswing.
• 6,600: The next major resistance level, with limited overhead supply.

Important Fibonacci pivot points for the week are as follows:

• Pivot Point: 6,485.93
• Support Levels: S1 at 6,483.81, S2 at 6,482.50, S3 at 6,480.38
• Resistance Levels: R1 at 6,488.05, R2 at 6,489.36, R3 at 6,491.48

Based on this technical framework, the recommended trading approach for the week includes:

Buy Zones:

• 6,365–6,415: A favorable dip-buying range supported by recent price action.
• 6,200: A robust long-term support level, ideal for initiating long positions if retested.
• 6,100–6,150: A value area suited for long-term investors.

Sell Zones:

• 6,460–6,470: A potential short-term sell zone to watch for price rejection.
• 6,515–6,600: Resistance defined by Fibonacci extension and psychological levels, where profit-taking should be considered.

Nasdaq 100 Trading Outlook: Bullish Momentum & Possible Pullback

Let’s dive into the current trading landscape for the Nasdaq 100 Index. As of September 5, 2025, the index closed at 23,633.01, riding a wave of strong bullish momentum. Volatility remains moderate to low, with the Average True Range (ATR) at 88.91. Market sentiment is generally optimistic but tempered by concerns over an AI bubble and expectations surrounding Federal Reserve rate cuts.

Technical indicators paint a bullish picture, though some signal caution. The 14-day Relative Strength Index (RSI) stands at 65.19, indicating a bullish trend yet edging close to overbought territory. The Stochastic RSI hits 100, and Williams %R sits near -0.068, both signaling overbought conditions. Meanwhile, the MACD shows a positive crossover at 36.49, a clear buy signal. The ADX confirms a strong trend at 39.86, supported by a Commodity Channel Index (CCI) of 183.41 and an Ultimate Oscillator reading of 64.80 — all pointing to sustained upward momentum. The analysis of these indicators suggests that precious metals, particularly gold, may continue to reach new highs, while other sectors may lag and pull back from current levels.

Nasdaq 100 Index Technical Chart Analysis, September 7, 2025

Source: Ki-Wealth analysis, Trading View

Looking ahead, Fibonacci levels offer insight into key price zones. The pivot sits at 23,566.68, with immediate support levels at 23,552.15, 23,543.18, and 23,528.65. Resistance zones line up at 23,581.21, 23,590.18, and 23,604.71. More broadly, immediate support is anchored around 23,552 (Fibonacci S1), with a significant psychological and technical support near 22,600. On the resistance side, the near-term hurdle is 23,604 (Fibonacci R3), with key psychological barriers at 24,000 and long-term resistance levels projected at 25,000 and 27,000 as the channel tops out in 2026.

The Nasdaq 100 remains locked in a long-term uptrend within a well-defined logarithmic channel. The recent breakout above the previous all-time high of 22,222 confirms bullish continuation. Currently trading in the upper half of this channel, the index shows strong momentum, though the risk of a short-term pullback is real.

Price targets for the week leading up to September 12, 2025, forecast a range between 23,079 and 24,403, with an expected close near 23,741, if we see new positive signals from the Fed.

Based on this analysis, Ki-Wealth recommends the following approach:

Buy Strategy
Consider entering between 23,550 and 23,600, close to Fibonacci support and the pivot point. Confirmation should come from the RSI staying below 70 and the MACD maintaining a positive stance. Set a stop-loss just below 23,400, beneath the 200-day moving average and the third support level (S3). Targets are 23,741 for the short term, 24,000 at the psychological resistance, and 25,000 for medium-term gains.

Sell Strategy
Look to sell in the 23,950 to 24,000 zone if the RSI breaches 70 and price momentum stalls. Confirmation would include bearish divergence in the RSI or MACD. Place a stop-loss above 24,200. Targets on the downside include the pivot at 23,600 and the 200-day moving average zone around 23,300.

Earnings To Watch This Week

Monday: CASY

Tuesday: SAIL, ORCL, GME, AVAV, SNPS

Wednesday: CHWY,

Thursday: KR, LOVE, HOFT, VRA, ADBE

Friday: None

Top Picks For the Week of September 8, 2025

While the market outlook this week leans bearish, Ki-Wealth identifies several standout stocks worth close attention. Investors seeking potential profitable trades or solid investments should consider these names carefully.

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