Decline concerns dominate the trend of US stocks, the "September curse" may continue.

The seemingly unstoppable rebound of the US stock market is beginning to shake, as the momentum that has driven the market to new highs is facing a series of challenges. Concerns about a US economic recession have sparked significant selling, and the sharp decline in early August has shown how quickly the situation can deteriorate, shocking investors accustomed to the market only going in one direction. While the S&P 500 index, the benchmark stock index, rebounded after the initial drop, it is crucial to note that not all lost ground has been recovered. The US August nonfarm payrolls report released last Friday showed weak job growth, further reinforcing the belief that the labor market is cooling down and causing market volatility. The S&P 500 index fell 4.25% last week, while the Nasdaq 100 index recorded its largest weekly drop since November 2022. Concerns about a US economic recession are just one "crack" in the armor, as investors also worry about global economic growth weakening, and the impact of this weakness on earnings and prices. This makes the future path look even more uncertain, despite the apparent clarity in the interest rate path, with investors counting down to the first rate cut by the Federal Reserve in four years. Additionally, factors such as the US presidential election, political turmoil in Europe, and capital concentration in large tech stocks could all pose risks that could damage the seemingly unshakeable bullish sentiment. Valuation bubbles have also created new vulnerabilities. Many investors have had to chase momentum, buying when stock prices are high, which means that if the trend starts to reverse, they may quickly sell off, causing the market to drop even harder and deeper before the usual buying support appears. It is worth noting that shifts in options trading and the power of systematic investors may lead to unstable trends and potential risk avalanches. Arun Sai, senior multi-asset strategist at BNP Paribas Asset Management, said, "Not long ago, the market was one-way, with everyone rushing into the same group of stocks. Now the situation is different, and the market is unlikely to repeat such relentless gains." New Targets Despite the struggles in August, the S&P 500 index is still up 13% year-to-date, while the MSCI global index has risen 10%. Due to the strong start to the year, strategists at institutions like UBS Group AG and RBC Capital had been raising their year-end targets for the S&P 500 index just a few weeks ago. However, these institutions now seem to believe that the golden days may be over. The average forecast of 20 strategists tracked by Bloomberg suggests that by the end of 2024, the S&P 500 index will only rise another 1%. Of course, the stock market has experienced such situations before. The market's response to events like bank failures in the... This adds a layer of uncertainty. I expect market sentiment to become more fragile before the end of the year and continue to prefer high-quality companies.Before the results of the November US election are announced, hedge funds may continue to sell US stocks. They typically choose to sell before such events to have more cash on hand to prepare for any volatility. However, data from Goldman Sachs Group, Inc. shows that despite hedge funds reducing their holdings of US stocks for several months, their risk exposure has increased compared to the past six election cycles, indicating there is still more room for liquidation. Jens Foehrenbach, who oversees the business department of the public market at Man Group, said, "The biggest risk facing the US stock market is that the economy is transitioning from expansion to slowing down or even possibly entering a recession. Valuations are somewhat overextended and a hard landing has not been priced in. Therefore, any negative surprises could trigger significant market reactions."