September Showdown: Tech Titans and Fed Decisions Set to Test Bull Market's Resilience

In the coming weeks, investors will get a clearer picture of whether the latest global bull market can continue or if its momentum is destined to derail. Key data releases over the next 14 trading days, including US non-farm payrolls, major inflation readings, and Broadcom’s earnings report, alongside the Federal Reserve's monetary policy decision, will set the tone for those returning to the market after a summer break. The volatility index suggests underlying tensions, with the trifecta of non-farm payrolls, CPI data, and the Fed's rate decision potentially spurring market turbulence.

The S&P 500 index, America's benchmark, recorded its weakest monthly performance since July 2024. Historically, September has been the worst-performing month for this index. As China's stock market set new highs over the summer, global indices, like the MSCI World Index, also neared historical peaks. This situates global equities at a potential crossroads, with upcoming data crucial for forecasting stock market trends.

US markets are facing their most challenging month historically: September has been the worst for investment returns over the past three decades. Despite the looming major data releases, volatility seems subdued, with the Chicago Board Options Exchange Volatility Index (VIX) crossing the 20-point threshold only once since late June. The S&P 500 hasn't seen a sell-off exceeding 2% for 91 consecutive trading days, the longest stretch since July 2024. The benchmark index reached another record high of 6,501.58 points on August 28, reflecting a 9.8% increase for the year and a massive 30% rally since the April low.

Market strategist Thomas Lee from Fundstrat Global Advisors advises caution for September. He remarked that the Fed, after a prolonged pause, appears ready to embark on a dovish rate reduction cycle. Yet, the anticipated slew of impactful data could complicate rate cut expectations, posing challenges for traders' position adjustments.

Lee, renowned for his bullish stance, anticipates a 5% to 10% dip in the S&P 500 during the fall, followed by a rebound to between 6,800 and 7,000 points by year's end, potentially surpassing the 7,000 mark.

A landmark data sequence will be pivotal for assessing AI-driven tech trust and rate reduction expectations. Following Nvidia’s recent earnings, Broadcom, another leading AI chip producer, will release its earnings this Friday. Broadcom's performance is critical for tech investors, given its role in driving chip stocks and broader tech equities higher throughout the year. As a core chip supplier for Apple and other tech giants, Broadcom substantially influences global AI demand.

US tech firms are investing heavily in AI, with beneficiaries including Nvidia, Broadcom, Marvell Technology, and Taiwan-based Global Unichip. Major players like Microsoft, Amazon, Google, and Meta, alongside AI frontrunner OpenAI, are partnering with Broadcom and others to deploy AI ASIC chips crucial for inference. This positions AI ASIC ahead of AI GPUs in potential market share expansion, a shift from Nvidia’s current dominance.

Given the surging global AI demand and substantial US government-led AI infrastructure investments, analysts foresee an extended bull run for AI-centric stocks. Nvidia, TSMC, and Broadcom play pivotal roles in sustaining this trajectory.

Under the banner of Nvidia, Google, TSMC, and Broadcom’s stock surges and strong earnings, an unprecedented AI investment wave propels US and global stock markets. Consequently, the MSCI World Index has risen significantly since April, hitting new highs.

September 1 marked the potential onset of a clearer trajectory for Wall Street, illuminating whether US stock rallies will persist or falter. Analysts noted that from September 2 to September 19, US economic data will dictate market sentiment. The S&P 500's weakest monthly gain since March precedes September, historically the worst-performing month.