As you start September, so will you spend it. The first month of autumn is considered the most unsuccessful for American stocks. According to UBS, over the last decade, the S&P 500 has fallen an average of 2% in September. At the same time, the drop in the broad stock index during the first trading session after Labor Day is interpreted differently. Some say it's profit-taking after a summer that went surprisingly well. Others blame massive sell-offs in the bond market and the consequent rise of bond yields.

Wake me up when September ends. Autumn began with panic in the bond markets. The recognition by the Federal Appeals Court of White House tariffs as illegal requires the US to return duties collected from other countries and increase the issuance of Treasuries to finance Donald Trump's "big and beautiful" tax cut law. It's no surprise investors are demanding a larger risk premium.

US Treasury Yield Dynamics

However, capital is fleeing Europe much faster than North America. This is driven by concerns about fiscal discipline. In France, the government of Francois Bayrou—the fourth in the last two years—is preparing to resign. Markets doubt that Britain will be able to plug its budget hole. The increase in defense spending by Germany raises concerns about system stability. As a result, German bond yields have reached their highest level since 2011, French yields since 2008, and British yields are at their highest since 1998.

The contagion is spreading from the EU to the US and is contributing to the decline of the S&P 500. Donald Trump believes that the sell-off in the US stock market is a result of the Federal Appeals Court's ruling on the illegality of import tariffs. The US president asserts that stock indexes behave similarly to tariffs, which is why they decline when tariffs are removed.

Investors are concerned about the increased influence of tech giants on the stock market. The share of six of them in the S&P 500 structure exceeds 30%. As a result, problems in this narrow group of issuers can trigger an avalanche of sell-offs across the entire broad stock index.

Tech Giant Capitalization Dynamics

Oppenheimer & Co. believes there's no need to worry about this. About 64% of the Russell 3000 members are trading above their 200-day moving average. This signals trust in the market. At major market peaks, this indicator usually falls below 60%.

Investors are now waiting for US employment data, which will put all the dots on the i's. Either the labor market has really cooled and the Fed needs to accelerate rate cuts, or it remains resilient and the US economy is still strong.

Technically, on the daily chart of the S&P 500, there was a gap at the open, followed by the formation of a bar with a long lower shadow. A bounce from 6415 via buying will increase the risk of a return to fair value at 6455. The fate of the broad index will depend on whether it can break through this level.