President Trump’s trade tariff uncertainties have caused considerable fluctuations in the markets, resulting in a decline in US stocks as September commenced. Historically, this month is known for being the weakest trading month of the year. Yahoo Finance correspondent Jared Blikre has insights on the market’s recent performance.
Market Overview: A Worrisome Start
According to Blikre, the beginning of September has brought an unsettling atmosphere to the markets, aligning with its notorious reputation. He shared a chart illustrating the S&P 500’s monthly returns, which dates back to 1990. The data reveals that September consistently stands out as the only month with negative returns. Conversely, the following months of October and November tend to show significant gains. Blikre noted that while the VIX, which measures market volatility, typically trends upward in September, it signals a need for caution among investors. Despite a slight decline of 0.7% in the S&P 500, Blikre reassured that this minor drop does not disrupt the overall long-term trend. The VIX has risen to 17, marking its highest point since early August, which serves as a gentle reminder for investors to remain vigilant, though it is not a cause for alarm.
Dollar and Interest Rates See Movement
In contrast to the stock market, the US dollar experienced a notable increase, marking its most significant rise in weeks, alongside a rise in interest rates. Blikre provided a three-month view of the dollar’s performance, indicating a sideways trend. However, when considering the year-to-date performance, it is evident that the dollar has lingered at lower levels for quite some time. He explained that many on Wall Street are bearish about the dollar due to tariff developments. A significant uptick in the dollar could pose risks for investors, especially as the 30-year yield is approaching levels not seen since July. Blikre pointed out that when yields surpass 5%, it tends to influence the bond market and subsequently impacts equities. Historical patterns show that such levels have previously led to declines in stock prices, suggesting a need for cautious observation.
Gold Prices Surge
Shifting focus to commodities, Blikre noted that gold has reached a new peak, with silver also showing signs of strength. Gold experienced its most substantial increase in several weeks, rising by 2.4%. A year-to-date chart shows that gold broke out of a consolidation phase, and Blikre referenced a quote from renowned technical analyst Ralph Alcampora, emphasizing that significant price movements often follow prolonged periods of consolidation. While some may speculate on gold’s trajectory, Blikre remains optimistic, believing gold prices will likely continue to rise as long as they remain above the $3,500 mark, barring any unexpected downturns in the coming days.
Bitcoin’s Performance Amid Market Trends
Finally, Blikre addressed Bitcoin’s performance, noting an intriguing trend. Despite the downturn in stock prices, Bitcoin saw an increase, which raises questions about its correlation with traditional markets. Historically, Bitcoin has mirrored stock movements, but it appears to be diverging, especially as it coincided with gold’s breakout. This shift could indicate Bitcoin’s evolving role as a hedge against inflation or economic turmoil. While he cautioned against making definitive conclusions, Blikre acknowledged that the bullish sentiment surrounding Bitcoin, currently around $111,000, could suggest a new phase for the cryptocurrency.
In closing, Blikre appreciates the opportunity to share these insights, highlighting the complexities and evolving dynamics of the financial markets.
