It’s finally over! The month marked by setbacks in the American market has concluded. Staying true to its reputation over a span of two past years, it caused some damage to the stock market and left a bearish mark on the US dollar. Let's dive into the details.

Stocks are eagerly anticipating the end of what has been their most unfavorable month this year. September has shattered hopes for profitability and positive performance, casting a shadow of gloom over stocks across the board. It's no surprise that major stock indices have posted lackluster results. The Nasdaq Composite (IXIC), home to tech stocks sensitive to interest rates, is poised to register a 7% decline for this month, making it the most significant loser among other indices. The S&P 500 (SPX) has retreated by over 5% throughout the month and is now hovering close to its June lows.

SPX / IXIC Chart by TradingView
Investors are finding it hard to accept the Fed's commitment to keeping interest rates higher for a longer period. Now, with the new normal, as outlined by the Fed, analysts are saying that the first rate cut may materialize sometime in the final quarter of 2024.

However, it's worth noting that there have been some developments in this regard. It’s happening… Against all odds, investors seem to be ignoring concerns about inflation, the possibility of another interest rate hike this year, the worsening $33 trillion US debt, and legislative budget battles, instead opting for riskier assets. Safe havens are no longer as appealing, and traders are venturing into uncharted territory. Riding this wave, the dollar index (DXY) showed signs of weakness for the first time in months, erasing more than half of its weekly gains on Thursday and Friday, but remained on track for a weekly gain. A slight decline in the US dollar has led to higher valuations of rival currencies such as the euro, the pound, and the Japanese yen.

DXY Chart by TradingView