Markets open September in the red after solid August gains, though the last couple of weeks turned volatile. History backs the weakness: since 1928, September is the worst month of the year, down just over 1% on average, with gains only 44% of the time. Today's broad selling comes from two drivers - yields and crude oil. The open question is which force wins: strong earnings against higher yields, higher energy prices, and rising inflation pressure. Geopolitical tension keeps building, especially in the Middle East.
Rates and data
The CME FedWatch tool now puts the odds of a September rate move near 66%, up from about 35% a week ago. Fed Chair Warsh sounded more hawkish than the street expected at Jackson Hole last Friday, and that stance may be warranted. Global yields are rising: 30-year highs for Japan's JGB, German yields at levels last seen since 2011, and UK yields at levels not seen since 2008. Data due today includes a JOLTS report (a delayed reading from July), plus ISM and PMI manufacturing numbers, which have been turning up. A softer CPI reading recently helped shift rate expectations, and another CPI print lands before the next Fed meeting.
Crude oil and geopolitics
Crude sits at over five-week highs near $88 a barrel. Over the weekend came the first strikes since the end of July, hitting an island off the coast, with threats to target Kharg Island, where most Iranian oil is shipped. The blockade stays in place, and China is applying no pressure on Iran to reach a deal. Tehran said in the last 24 hours that if the US returns to the resolves it had in June, it would reciprocate, but no talks are scheduled. Qatar and Pakistan are among the mediators trying to bring the US and Tehran back together. G20 finance meetings in North Carolina may or may not produce results; the US is talking with several countries about financing and economic pressure on Iran and the Middle East. A Venezuelan oil deal was announced to help refill reserves, but ramping up production there is likely a year or two away. Positive geopolitical news could quickly reverse crude and lift equities.
Chips and tech
The semiconductor pullback ties directly to rising yields and inflation pressure. Nvidia (NVDA) is under pressure and the SMH is down more than 1.5%. Also falling: Marvell (MRVL), SanDisk (SNDK), Corning (GLW), and semi-equipment makers KLAC (KLAC), Lam Research (LRCX), and Micron (MU). Prices for memory, GPU, and CPU chips keep climbing, adding to inflation, while higher yields cap the sector's gains. The 10-year yield hit 4.79%; a move above 4.8% would mark levels not seen since 2007, and near 5% would cause real pain for equities. The global yield rise is lifting all rates, so stabilization may not come easily. Earnings could help: Dell (DELL) and Palo Alto Networks (PANW) report after today's close, and Broadcom (AVGO) reports Wednesday after the close.
Amazon under legal pressure
Amazon (AMZN) shares are down nearly 2% in the pre-market. On Monday, 22 states joined the FTC in suing the company, alleging it secretly and systematically overcharged advertisers by manipulating its pricing and auction systems. The suit claims Amazon may have taken more than $20 billion from advertisers through hidden search charges under a floating system that changed around 2019. Amazon pushes back, saying the 2019 auction changes saved advertisers more than $8 billion between 2021 and 2025. The company pulled in more than $68 billion in ad revenue over the last year, a quiet winner that has grown more than 20% year-over-year each quarter. This is not Amazon's only FTC fight; another case starts early next year, and the company previously reached a $2.5 billion settlement over Prime membership costs. Amazon will likely appeal.
