Core Viewpoint - September is historically known as a challenging month for the U.S. stock market, often referred to as the "September Curse" [2] Group 1 - Historical data indicates that September is typically the worst-performing month for U.S. stocks, with significant events like the internet bubble and Lehman crisis occurring during this month [2] - This year, the combination of interest rate cut expectations and high inflation raises questions about whether the "curse" will manifest again [2]

Group 1 - Despite rising expectations for a Federal Reserve rate cut, hedge funds reduced their positions in August and remained hesitant in September [1][2] - Historical data indicates that September is typically a challenging month for U.S. stocks, with the Dow Jones average declining by 1.1% since 1897 and a less than 50% chance of positive returns for major indices [2] - The overall performance of U.S. stocks in August was strong, with the Dow Jones up 3.2%, marking the best August since 2020, but this rally was primarily driven by retail investors rather than institutional participation [3] Group 2 - Structural concerns, including heavy valuations and high retail investor exposure, are causing institutions to remain cautious [4] - The risk of cross-market interest rate linkage is increasing, as high yields on long-term bonds in Japan and the UK could lead to broader market adjustments [4] - Short-term U.S. stock performance will be influenced by upcoming non-farm payroll data and the Federal Open Market Committee meeting, with expectations of a 25 basis point rate cut [5]