The US stock market is about to face the September "curse," and gold prices hit a historical high! Four key points cannot be ignored!

Investment Insights -

U.S. stocks were closed on Monday due to Labor Day, which means they have entered the "most negative" seasonal month, commonly referred to as the September "curse." Historical data shows that September is often the worst-performing month for U.S. stocks, with the S&P 500 averaging a decline of 0.8% over the past 35 years, experiencing declines 18 times, making it the only month where declines outnumber gains. Economists generally believe that the non-farm employment data to be released on September 5 will be key to this month's trends.

Coincidentally, on Tuesday (September 2), gold surged nearly 1% to a session high of $3,508, setting a new historical high. Silver prices also soared, breaking the $40 mark for the first time since 2011. A series of signs may indicate that the market is cooling from the AI rally in August, followed by a rapid increase in risk-averse sentiment.

Liquidity Crisis? Goldman Sachs Warns of Exhausted Systemic Demand in U.S. Stocks

Goldman Sachs reviewed records since 1928 and found that September is the worst-performing month for the S&P 500, with an average return of -1.17%. More alarmingly, the second half of September is the worst two weeks of the year, with an average return as low as -1.38%.

Goldman Sachs recently issued a warning for U.S. stocks, stating that systemic demand has essentially dried up, indicating that the market will face challenges this month. CTA (Commodity Trading Advisors) positions have reached a 100% full position status, with purchasing power plummeting from $27.66 billion in July to $12.56 billion in August. It is expected that the total purchasing volume for U.S. stocks in September will further shrink to only $2.96 billion, meaning that the historically weak month of September will lack supportive capital inflows. More importantly, a market downturn could trigger sell-offs of up to $73.69 billion, posing a significant asymmetric downside risk.

The "East Rises, West Falls" Narrative May Reignite, Alibaba Could Be the Catalyst

Last Friday (August 29), chipmaker Marvell's revenue outlook was worse than expected, causing its stock to plummet 18.6%, leading to a widespread decline in U.S. chip stocks, with the Philadelphia Semiconductor Index dropping over 3%, raising concerns about a cooling AI market.

Additionally, Alibaba has developed a new AI inference chip to reduce reliance on NVIDIA, which may reignite the "East Rises, West Falls" narrative. Data shows that hedge funds have rotated into emerging market stocks with unprecedented strength over the past month, led by Chinese assets. This indicates that as U.S. stocks face challenges, global capital is actively refocusing and reallocating assets in other parts of the world.

U.S. stock valuations are also an important risk factor, with the S&P 500's forward price-to-earnings ratio reaching 22 times, close to the levels seen at the end of the internet bubble.

The Independence of the Federal Reserve and the Dollar Credit Crisis Cannot Be Ignored

In fact, the strong rise in the U.S. since April has primarily benefited from easing trade tensions, expectations of interest rate cuts by the Federal Reserve, and the potential economic boost from the Inflation Reduction Act. Since this rally has been led by large tech companies, the importance of interest rate cuts is self-evident However, behind the expectation of interest rate cuts lies a huge risk. The Trump administration's attacks on the independence of the Federal Reserve have further escalated. On August 26, Trump announced the immediate dismissal of Federal Reserve Board member Lisa Cook. If the court grants Cook a temporary injunction, she may still participate in the Federal Reserve's meeting in September. Additionally, European Central Bank President Christine Lagarde stated that the U.S. court's ruling on Trump's tariffs adds another layer of uncertainty. Notable Wall Street economist Peter Schiff previously stated in a podcast that the dollar faces not just a correction issue, but a collapse. He predicts that the dollar may fall to 90 by the end of this year, possibly even slightly below 90. Furthermore, by the end of next year, if the U.S. reinstates quantitative easing, the dollar index could drop to 70. It is worth noting that 70 is approximately the lowest point since 2008. However, I do believe that ultimately we will fall below this level. I also expect the dollar index to drop to close to 40 or even lower.

The interest rate cut in September is a certainty, with subsequent policy paths focusing on non-farm data.

It is noteworthy that the U.S. core PCE price index for July, released last Friday (August 29), rose 2.9% year-on-year, the highest since February. However, the market's expectation for a 25 basis point rate cut by the Federal Reserve in September remains as high as nearly 90%. This is due to Federal Reserve Chairman Powell's previous remarks indicating that under the dual mandate, the importance of the labor market has been placed above controlling inflation.

Market focus is on the Federal Reserve's subsequent policy path, with non-farm data expected to provide investors with clearer guidance. However, it should be noted that if inflation remains far from the Federal Reserve's 2% target and the labor market remains strong, the pace of future rate cuts by the Federal Reserve may face adjustments, which could exert some pressure on U.S. tech stocks.

Bank of America analyst Matthew Welty stated that as the market reached new highs over the summer, some investors might feel the need to at least pull back some funds. Welty pointed out that both the Federal Reserve and Trump may respond to any pressure on U.S. stocks. Therefore, Bank of America believes that the autumn sell-off in U.S. stocks could present an excellent buying opportunity.

S&P 500 Index Technical Analysis: Breaking through 6350 points may trigger a larger correction.

S&P 500 Index Daily Chart:

Image source: tradingview The daily chart shows that the S&P 500 index is currently constrained by the 6500-point level, and it reached a time node on August 15. The possibility of forming a top in the current construction phase cannot be ruled out. If the S&P 500 index subsequently breaks through the 6350-point level, further downside potential is expected to open up, with attention on the 6300 or even 6150-point levels. However, if the S&P 500 index continues to set new highs before forming an effective pullback, the risk of a pullback may increase accordingly