Written by: Tide Research
Last Friday, the three major US stock indices ended their two-day winning streak and closed lower collectively. The S&P 500 fell 0.38% to 7,718.60 points, the Nasdaq fell 0.29% to 26,506.99 points, and the Dow fell 0.51% to 53,414.25 points. For the full week, the Dow fell 0.27%, the S&P 500 fell 0.08%, and the Nasdaq gained 0.54%. The core pressure on the broader market was the better-than-expected August non-farm payrolls data, which rekindled market bets on a September rate hike, pushing short-term US Treasury yields to their highest level in over a year and a half. However, the market did not move unilaterally lower; funds concentrated in the chip sector, with the Philadelphia Semiconductor Index bucking the trend to surge 3.37% to 11,735.26 points, and memory and optical communication stocks strengthening across the board. Geopolitical tensions escalated again over the weekend, with Iran announcing it would declare a "restricted zone" in the Strait of Hormuz in the coming days, as US-Iran military confrontations continued to intensify, leading WTI crude oil to open higher in Monday's Asian session. This week's focus: August CPI data and the evolution of the US-Iran conflict.
Strong Jobs Data Revives Rate Hike Worries; Chip Sector Defies Trend and Attracts Capital
The much stronger-than-expected US August non-farm payrolls data led markets to re-price a September Fed rate hike. Short-term US Treasury yields rose to their highest level in over a year and a half. The 2-year Treasury yield rose 3.4 basis points to 4.3703%, touching 4.416% intraday, its highest since January 2025; the 10-year Treasury yield remained around 4.78%. The US Dollar Index rose 0.27% to 99.177, reversing its previous decline.
The renewed rate hike expectations directly pressured high-valuation assets. The three major indices ended their two-day winning streak and closed lower collectively. The S&P 500 fell 0.38% to 7,718.60 points, the Nasdaq fell 0.29% to 26,506.99 points, and the Dow fell 0.51% to 53,414.25 points. Market pricing for a September hike returned above 50% after the jobs data release.
However, capital did not withdraw from the equity market entirely but selectively concentrated in sectors with solid industry logic, namely chip stocks. The Philadelphia Semiconductor Index defied the broader trend to surge 3.37% to 11,735.26 points, its highest closing level since August 27. Memory and optical communication stocks led the gains, with Nvidia rising over 2%.
The industrial logic behind this performance is clear: continued validation from AI infrastructure order data, the ongoing digestion of Dell's record AI server order backlog and strong guidance, and Broadcom raising its AI revenue forecast to $58 billion and outlining a long-term roadmap to $230 billion by 2028, all continue to reinforce market confidence in the AI hardware supply chain. While renewed rate hike expectations pressured overall valuation levels, sub-sectors with strong fundamental tailwinds still attracted capital inflows.
The "Magnificent Seven" came under overall pressure. The Wind US Tech Giants Index fell about 1.13%, with Tesla leading the decline, plunging 5.92%. Tesla's drop was related to the macro interest rate environment, as high-valuation, high-growth stocks are most sensitive to rate changes. Nvidia bucked the trend, closing up over 2%. Lululemon continued to be under pressure following its after-hours drop of over 17% earlier.
Iran Announces Plans to Set Up Hormuz Strait "Restricted Zone"; Oil Opens Higher
Geopolitics once again became a key market variable over the weekend. On September 6 local time, Iran's Supreme National Security Council Secretary Rezaei stated that Iran would announce a "restricted zone" in the Strait of Hormuz region in the coming days. The Iranian Revolutionary Guard Corps (IRGC) Navy issued a statement on the same day saying its forces had sunk a US military unmanned surface vessel attempting to enter the Strait of Hormuz.
Prior to this, the US military had been applying sustained pressure in the Strait of Hormuz. The US Central Command (CENTCOM) reported that as of September 6, during its maritime blockade operations against Iran, the US military had redirected 92 merchant vessels, disabled three, and boarded and inspected two vessels. The IRGC claimed it had launched ballistic missile strikes against a US aircraft carrier and a destroyer.
The US-Iran standoff in the Strait of Hormuz is escalating from friction towards a full-scale confrontation of blockade and counter-blockade. Iran's announcement of a "restricted zone" means any foreign vessel entering the area without permission will face military risks, posing a direct threat to global crude oil shipping lanes.
As a result, WTI crude oil opened higher in Monday's Asian session. On Friday, WTI crude settled up 0.20% at $91.48 per barrel, while Brent crude settled up 0.80% at $96.28 per barrel, with both benchmarks gaining about 9% for the week. The US average retail diesel price hit a record high of $5.85 per gallon. If passage through the Strait of Hormuz faces further obstruction, oil prices could continue to rise.
The escalation of geopolitical risks, coupled with renewed rate hike expectations following the jobs data, creates a dual pressure on the market this week.
Global Central Banks Accelerate Gold Localization; Gold Stages V-Shaped Recovery to Recoup Most Losses
According to the latest survey by the World Gold Council, over the past 12 months, 19% of central banks increased the share of their domestic gold reserves or diversified their allocations, up from just 7% a year ago. The number of central banks storing gold in New York and London vaults continues to decline, as geopolitical risks are changing the configuration pattern of global gold reserves.
Spot gold fell 0.97% on Friday to $4,429.29 per ounce, staging a V-shaped recovery to recoup most of its losses after once falling over 2% intraday to $4,365.25.
This Week's Focus
US August CPI Data (Thursday). Following the stronger-than-expected jobs data, market bets on a September rate hike have already rekindled. CPI will be the key data point to verify whether what Waller previously called "the continuation of the disinflation trend" holds true. If CPI exceeds expectations, the probability of a September hike will rise further; if CPI softens, the dovish expectations sparked by Waller's remarks may regain the upper hand.
Evolution of the US-Iran Conflict in the Strait of Hormuz. Following Iran's announcement of plans to establish a "restricted zone," the US response and whether navigation through the strait faces further obstruction will directly impact oil price movements and global risk appetite. Brent crude already gained about 9% last week; if the situation escalates further, oil prices could rise further, pushing up inflation expectations.
Changes to Anthropic's IPO Timeline. According to media reports, Anthropic is expected to launch its IPO roadshow as early as mid-October and complete its listing just days before the US mid-term elections in November. Previously, the market expected its prospectus to be made public as early as this coming week, but it has now been postponed to late September. As one of the most anticipated IPOs in the AI field, changes to its listing schedule will affect market sentiment towards the AI sector.
Three key themes for this week's market are now clear: strong jobs data has revived rate hike concerns, the chip sector is defying the trend based on industry logic, and the escalation of the US-Iran conflict in the Strait of Hormuz adds a geopolitical premium to oil prices. The combination of these three factors suggests market volatility is unlikely to be low this week.
