"Buy on the dips at nines"? Can stocks, bonds, and gold escape this time?

September has always been a "curse" for the financial markets. This year, due to uncertainty surrounding the Fed's interest rate cut expectations, market volatility may further increase.

Historically, prices of stocks, bonds, and gold usually decline in September, as traders reassess their portfolios after the end of the summer. Since 1950, the S&P 500 Index and the Dow Jones Industrial Average have experienced the most significant declines in September; in the past decade, bonds have fallen in eight out of ten Septembers; and since 2017, the price of gold has never risen in September.

September has arrived, and the market may be in a calm before the storm. With current high stock market valuations, historically low bond yields, and high sensitivity to uncertainty, the market remains highly sensitive. The employment data to be released this Friday will be a focal point for the market, as the results will directly impact the direction of the Fed's monetary policy.

The last employment data before the September interest rate decision makes the market more sensitive than usual

After experiencing roller-coaster-like market volatility in August, investors are pinning their hopes on Friday's non-farm payroll data, which will provide crucial clues for the Fed's next move, whether to cut rates by 25 basis points or 50 basis points in September.

Bob Savage, Head of New York Bank Market Strategy and Insights, stated that the upcoming U.S. employment data will have a decisive impact on the market trend for the remainder of the year.

Historical data shows that September is often a month of poor performance in the financial markets. Investors tend to become more cautious, preferring lower-risk investments to avoid potential losses. In a U.S. election year, this sensitivity will be even higher.

Analysis points out that as the market has fully priced in the expectation of four 25 basis points rate cuts by the end of this year, if the Fed's stance at the FOMC meeting ending on September 18 falls short of dovish expectations, the risk of sharp market fluctuations will increase.

"A decline could trigger a chain reaction, especially when the market has priced in the Fed rate cuts so high, and investors are all chasing the ideal state of 'Goldilocks,' the market is more sensitive than usual," said Vishnu Varathan, Head of Economics and Strategy at Mizuho Bank in Singapore.

There are certain risks in the current U.S. stock market, especially when the stock prices of a few large tech companies decline, the entire market may be affected. "The current U.S. stock market is mainly supported by a few large tech stocks, and these giant companies have a significant impact on the overall market indices," said Manish Bhargava, CEO of Singapore's Straits Investment Management, "Any unexpected event could lead to rapid unwinding of leveraged positions."

Strategists say caution will be key to navigating the market

Another source of volatility is the first televised debate next week between Vice President Kamala Harris and former President Donald Trump.

Given the high level of risks from various sources, strategists say caution will be key to navigating the market.

RBC Capital Markets data shows that hedge strategies have had a cost advantage for a long time, and LPL Financial is optimistic about investment prospects in the U.S. communication services, energy, and healthcare sectors The New York Stock Exchange believes that the continued rise in the stock market requires economic growth and a loose policy environment to support it