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September Curse ": The US stock market felt it on its first day!

白云追月素
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On the first trading day after the Labor Day holiday, the US stock market started September with a sharp drop on Tuesday.
Interestingly, looking back at the market over the past few decades, September was not only the worst month for the US stock market, but also for assets such as gold and Bitcoin. The cold water that began in September this year is clearly making various cross asset traders feel a trace of the "September Curse"'s killing aura
According to market data, as of Tuesday's close, the S&P 500 index fell 2.4% throughout the day, marking its largest decline since Black Monday on August 5th. Nine out of the 11 sectors in the S&P 500 index fell, with the technology, energy, communication services, and materials sectors experiencing the largest decline.
The VIX index, known as the "panic index," surged 33.2% on Tuesday to 20.72, marking the largest daily increase and highest closing level since early August. Although the increase in the "panic index" this time is not as astonishing as on last month's "Black Monday" (when it soared above 65), the recent fluctuation has undoubtedly caused many volatility bears to face another round of huge margin calls in less than a month since the last one.
Compared to the S&P 500 index, the biggest loser in Tuesday's market was undoubtedly the tech dominated Nasdaq. The Nasdaq fell 577.33 points on Tuesday, a drop of 3.26%, to close at 17136.30 points. This is also the largest decline in the Nasdaq since August 5th, and the third largest single day decline in the past year
Meanwhile, the VanEck Semiconductor ETF, with a scale of up to $22 billion, experienced its largest decline since March 2020 on Tuesday.
Among the tech giants leading the market this year, Nvidia's stock price plummeted 9.5% overnight. The company's market value evaporated by about $279 billion in just one day, setting a record for the largest single day decline in US company market value ever, surpassing Meta's record for market value loss after its dismal financial report in February 2022. It is reported that the US Department of Justice has issued subpoenas to Nvidia and other companies seeking evidence of the chip manufacturer's violation of antitrust laws.
Murphy& Paul Nolte, market strategist and senior wealth management manager at Sylvestment Wealth Management, stated that Nvidia and artificial intelligence stocks have been market stars for some time now, and the temporary decline in popularity is expected. The investment return on all these expenses remains a major issue.
Recently, an increasingly evident trend is that market participants are beginning to question whether the massive investments made by technology companies in hardware for artificial intelligence computing can be sustained. Although the revenue of Nvidia and other chip manufacturers has surged, the revenue of Microsoft and Google has not grown significantly due to their investments in artificial intelligence, and the market is concerned that their high investments will not last long.
In addition to the performance challenges currently faced by these leading industries and individual stocks, the poor performance of macro level US economic data is clearly also a major negative factor dragging down market trading sentiment at the beginning of this crucial 'non farm week'.
The data released by the Institute for Supply Management (ISM) on Tuesday showed that although the manufacturing performance of the US ISM in August slightly improved from the eight month low in July, it is still far below the boom bust watershed of 50. The ISM Manufacturing Purchasing Managers' Index (PMI) for August recorded 47.2, up 0.4 points from 46.8 in July, but still below the market's original expectation of 47.5.
At present, the ISM Manufacturing PMI has been below 50 for the fifth consecutive month, indicating that economic activity in the manufacturing sector has cooled down for five consecutive months. Looking at the longer term, PMI has been below 50 in 21 out of the past 22 months, with the only time recorded being 50.3 in March of this year.
Chris Williamson, Chief Business Economist at S&P Global Markets Intelligence, wrote that the further decline in PMI data indicates an increase in the drag on the economy from manufacturing in the mid third quarter. Forward looking indicators suggest that this drag may intensify in the coming months. The sales speed was lower than expected, resulting in the warehouse being filled with unsold inventory, and the lack of new orders prompted the factory to reduce production for the first time since January. Due to concerns about overcapacity, manufacturers have also laid off employees for the first time this year and reduced the purchase of inputs.
The combination of reduced orders and increased inventory has sent out the darkest forward signal for production trends in a year and a half, and is also one of the most worrying signals since the global financial crisis, "Williamson said.
It is worth noting that Tuesday's market "earthquake" was clearly not limited to stocks: commodities were also hit - Brent oil prices plummeted nearly 5% during trading, falling back below $74, wiping out all gains since 2024, while WTI crude oil approached $70 per barrel
People are concerned that while Libya restarts oil supply, the global economy may struggle to escape the fate of recession, causing many commodity market traders to ignore potential geopolitical risks around the world.
Even one of the most outstanding commodity assets of 2024, gold, was not spared from Tuesday's sharp decline. After trading above $2500 for most of the past two weeks, gold fell back below that level overnight.
Of course, if any asset class benefited from the risk aversion sentiment in the market on Tuesday, perhaps it was the US Treasury bonds. US Treasury yields fell across the board on Tuesday, with the 10-year Treasury yield, known as the anchor of global asset pricing, falling 7.6 basis points to 3.838%, and the 2-year Treasury yield falling 5.8 basis points to 3.873%.
Looking ahead to the future, investors will receive a series of labor market data for the rest of this week, with Friday's key non farm payroll report undoubtedly receiving the most attention.
According to the pricing of the interest rate swap market, traders currently expect the Federal Reserve to cut interest rates by more than two basis points in the next 12 months, the largest decline outside of the economic recession cycle since the 1980s. Ian Lyngen and Vail Hartman from BMO Capital Markets stated that the terrifying scenario of last month's rising unemployment rate will make traders "nervous" before Friday's employment data is released.
Although this week's employment report is not the only determining factor, it may become a key factor for the Federal Reserve to decide whether to cut interest rates by 25 basis points or 50 basis points, "said Jason Pride and Michael Reynolds of Glenmede. Even the mild signals in this week's employment report could become a key decision point for the Federal Reserve on whether to adopt a more cautious or aggressive approach
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