(Bloomberg) — The equity market rally may stall near record highs even if the Federal Reserve starts a highly anticipated rate-cutting cycle, according to JPMorgan Chase & Co. strategists.

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The team led by Mislav Matejka — who has been among the most bearish voices on stocks this year — said that any policy easing would be in response to slowing growth, making it a “reactive” reduction. The seasonal trend is another impediment, with September historically the worst month for US stocks.

“We are not out of the woods yet,” Matejka wrote in a note, reiterating his preference for defensive sectors against the backdrop of a pullback in bond yields. “Sentiment and positioning indicators look far from attractive, political and geopolitical uncertainty is elevated, and seasonals are more challenging again in September.”

After slumping in the early days of August, the S&P 500 recovered to end the month within striking distance of a record high on bets that the Fed will start cutting interest rates at its next policy meeting on Sept. 17-18. The MSCI All-Country World Index is at an all-time peak.

The US benchmark has declined 4.2% on average in September in the past five years, according to data compiled by Bloomberg. Traders are also awaiting a raft of economic data, including the all-important jobs report this week, for more clues on the health of the economy.

S&P 500 futures declined 0.4%. The stock market is closed for a holiday on Monday.

Other market strategists including Bank of America Corp.’s Michael Hartnett have recently warned that the Fed’s first rate cut would be a catalyst to sell equities rather than drive another leg higher.

–With assistance from Kit Rees.

(Adds move in US stock futures in sixth paragraph. A previous version corrected the timing of jobs report.)

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