Stock market news: Summer's end reflects heavily on Wall Street's current performance
In the financial world, the month of September has traditionally been a challenging one for the US stock market. According to historical data, the S&P 500 has seen an average decline of 4.2% in the last five years, a trend that seems to be continuing this year.
The market's recent performance, however, was strong in August. The S&P 500 rose by almost two percent and surpassed the 6,500-point mark for the first time, setting a total of 20 new all-time highs. This strong performance, according to Sam Stovall, Chief Investment Strategist at CFRA Research, is a factor contributing to the current market decline.
Seasonality is not the only issue at hand. The ongoing tariff disputes, particularly those initiated by the Trump administration, have been causing uncertainty for companies that import goods. A recent ruling by the US Court of International Trade found many tariffs to be against the law, but the case is now heading to the Supreme Court, prolonging the uncertainty.
Bond investors are also playing a role in the market's current state. Concerns about the US having to refund billions in tariff revenues have led to a push for higher yields. The yield on 10-year US Treasury notes has risen to 4.27 percent, and the yield on 30-year US Treasury notes has reached over 4.97 percent.
These high yields, according to Ross Mayfield, investment strategist at Baird Private Wealth Management, present a headwind for stocks trading at high valuations. Mayfield's sentiments are echoed by Tom Essaye of Sevens Report Research, who notes that people might be trimming their positions as the market is not far from its highs, referring to the Infront S&P 500.
The market's current state has led to significant losses on the US stock market at the start of September. All major US indices are trading in the red, and the S&P 500 has fallen by more than two percent on average over the past ten years during September.
Despite these challenges, there are potential catalysts on the horizon. The US jobs report for August, scheduled for release next Friday, could provide new impetus for the markets. The performance of the Wall Street in August was strong, and a positive jobs report could help the market regain some of its recent losses.
However, according to Sam Stovall, the market could give up some of its recent gains in the short term while waiting for new catalysts. The market may need to consolidate before it can move higher, and the current uncertainty and high yields could contribute to this consolidation period.
As we move forward, it will be interesting to see how the US stock market navigates these challenges and potential catalysts. The market's resilience in August, despite the risks of a possible correction, suggests that it may be able to withstand the current headwinds. But the historical trends and ongoing tariff disputes are reminders that the market is never without its risks.
