'Wake up when September is over': U.S. stocks have started fall with a dip

U.S. stocks ended trading on September 2 - the first working day of the season in the U.S. - with a decline. Investors weighed new risks due to the possible cancellation of duties against the background of the beginning of the month, which is historically considered unfavorable for the market. Additional pressure on sentiment was exerted by a rise in Treasury bond yields.

- The blue-chip Dow Jones Industrial Average index fell 0.55% on Tuesday to close at 45,296 points.

- The S&P 500 broad market index fell 0.7 percent to 6,415.5 points.

- The Nasdaq Composite Technology Market Index ended the day down 0.8% to 21,279 points.

- The yield on 10-year treasuries rose to 4.27% and 30-year treasuries surpassed 4.97%.

- The price of gold updated the maximum: the continuous contract for gold on the New York Mercantile Exchange NYMEX during the day rose above $3600 per troy ounce. By the end of trading, the metal recorded a growth of 1.15% - to $3592.3 per ounce.

With the end of the summer season, investors began to take profits on the favorite shares of the bull market. Thus, the securities of Nvidia at the main trades fell by 2%, Amazon and Apple - by about 1%. Alphabet shares, having fallen by 0.7% during the day, jumped by 6.6% in extended trading after the court ruling that Google is not obliged to sell its Chrome browser.

Quotes are also affected by the decision of the U.S. federal appeals court, which was made on August 29, on the eve of the long weekend. The court recognized most of the duties imposed by the administration of Donald Trump as illegal, as only Congress has the authority to impose such large-scale trade surcharges on imports. President Trump called the decision "highly politicized" and vowed to appeal to the Supreme Court. "The stock market is going down because the stock market needs duties. They need duties," Trump said (quoted by Bloomberg).

The rise in the yields of trijeris, according to market participants, reflects expectations that the U.S. may have to return billions of dollars collected through high duties, which will further exacerbate the already tense situation with the national debt, CNBC writes.

But amid such high uncertainty, investors are increasingly concerned that the market is overvalued. The S&P 500 is now trading at a ratio of 22 to analysts' forward earnings estimates for the next 12 months. The market has been more expensive only twice since 1990 - at the height of the dot-com bubble and during the tech euphoria following the pandemic recession in 2020, Bloomberg recalls.

September is historically considered the weakest month for stocks, with the S&P 500 losing an average of 4.2% in September over the past five years and more than 2% over the past ten. According to CFRA Research strategist Sam Stovall, the S&P 500 Index hit five new all-time highs in August, bringing the total number of records since the beginning of the year to 20. "In years when the index has set 20 or more new highs by the end of August, September still ended lower on average," the strategist said . - Now the market is likely to partially correct recent gains in anticipation of new drivers."

Investors are waiting for the key event of the week - the labor market report for August, which will be published on Friday. Its results may influence the Federal Reserve's decision on the interest rate, which is expected in the middle of the month.

"Wake me up when September is over! - Thomas Tsitsouris of Strategas joked in a conversation with Bloomberg. - We suspected from the beginning that September would be volatile, and the first day confirms it one hundred percent."

"30-year bonds yielding 5% is a clear headwind," Baird Private Wealth Management investment strategist Ross Mayfield told CNBC. - That will remain a major deterrent for stocks with overheated multiples."

"Less revenue from duties means more placements of U.S. government debt to cover the budget deficit," Scott Wren of Wells Fargo Investment Institute explained to Bloomberg the market's fears over the court's decision on duties.

"Barring some sort of September surprise, investors will still have to deal with continued uncertainty around trade and duties, as well as economic data that could be worse than expected and call into question the sustainability of current market valuations," Ameriprise's Anthony Salimbene told Bloomberg. - Nevertheless, investors have been successfully navigating this environment for several months now, and the market continues to gradually rise."

In his view, investors should maintain a diversified portfolio, be cautiously optimistic about the investment climate based on fundamental market growth, and be prepared to wait out possible September volatility if it does occur.

This article was AI-translated and verified by a human editor