September Struggles: Weakness Persists Even as Yields, Dollar, Crude Step Back Slightly

The market's September struggles persisted early Wednesday after a soft start to the shortened week. Yields, the dollar, and crude all stepped back slightly but remain near recent highs that put the brakes on the summer rally. ISM Services data are due soon after the open.
5 min read
Photo by Adobe

Key Takeaways

  • Crude, dollar, yields step back slightly but remain near recent highs, keeping pressure on stocks

  • Volatility up following recent one-month lows, potentially raising chances for sharper market moves
  • ISM Non-Manufacturing Index due soon after the open and expected to show slight pullback

(Wednesday market open) The same dynamics that kept stocks struggling yesterday remain at play this morning, including a solid dollar, firm Treasury yields, and an almost unrelenting rally in crude. Though crude stepped back slightly Wednesday, it remains at 10-month highs.

Taken together, the setup echoes what the market faced in September 2022, a tough month for Wall Street. But unlike last year, futures prices now point toward a pause in rate hikes this month and there’s growing belief in the analyst community that earnings have turned the corner after several quarters in the red. But the next earnings season is still more than a month away.

In the shorter term, investors might want to keep an eye on the charts if stocks continue to retreat. The 50-day moving average of 4,460 for the S&P 500® Index (SPX) isn’t far below Tuesday’s close. Also, the 20-day moving average recently fell below the 50-day moving average for the first time since April, making the overall market look a little less bullish from a technical standpoint.

The Fed’s Beige Book and the ISM Non-Manufacturing Index for August stand out today in a week lacking fireworks. Kroger (KR) earnings loom Friday.

Morning rush

  • The 10-year Treasury note yield (TNX) slipped two basis points to 4.24%.
  • The U.S. Dollar Index ($DXY) steadied at 104.68.
  • Cboe Volatility Index® (VIX) futures rose slightly to 14.26.
  • WTI Crude Oil (/CL) futures fell to $86.34 per barrel.

What to watch

Tracking services: The Institute for Supply Management’s August Non-Manufacturing Index is due just after the open today, and consensus is for a reading of 52.4%, according to That would keep the headline figure in expansion mode above 50% following a 52.7% figure in July. If the reading is below July’s, it would be the second month in a row of slippage but still above readings from earlier this year. The prices component of the report rose to 56.8% in July and could be worth checking for signs of increase. Rising services prices are behind a lot of the current inflation, according to the Fed.

Tracking ISM data can give investors clues about the pace of Gross Domestic Product (GDP) growth. The Atlanta Fed’s GDPNow model recently pegged Q3 GDP at 5.6%, up sharply from the government’s recent 2.1% for Q2 GDP growth. Wall Street consensus, however, is just above 2% for Q3.

Loonie path: The Bank of Canada meets today, and its rate decision could affect fortunes of the Canadian dollar. Canada is in the vanguard of central bank meetings this month and sometimes helps set the tone, though there’s been quite a divergence in central bank policy decisions over the last few months.

Stocks in Spotlight

Corporate news is a bit thin this week, but a few developments might catch investors’ eyes this morning.

  • United Airlines (UAL) issued a regulatory filing noting that the price of jet fuel has climbed 20% since July. The company continues to expect its Q3 capacity and operating revenue to meet previous guidance.
  • General Motors (GM), which faces a possible strike by the United Auto Workers union, says a work stoppage would have “significant costs attached that would threaten our ability to maintain our manufacturing momentum,” Reuters reports.
  • Tyson (TSN) is taking cost-cutting steps amid flat demand and falling wholesale prices for poultry, The Wall Street Journal reports.
  • China’s government has banned the use of Apple’s (AAPL) iPhone at work for government employees, the Wall Street Journal reports. This is the government’s latest step in a campaign to reduce reliance on foreign technology, the paper adds, and could hurt Apple’s success in the country. Apple relies on China for about 19% of its revenue.

Eye on the Fed

As of this morning, the probability that the Federal Open Market Committee (FOMC), the Fed’s policy-setting arm, will maintain current rates after its September 19–20 meeting is 93%, according to the CME FedWatch Tool. The probability of a rate hike at the November meeting is just over 40%, the FedWatch Tool says. Those probabilities are unchanged from 24 hours ago.

Investors get a look today at the Fed’s September Beige Book release. It seldom moves the market, but it’s still worth a glance because it represents what the Fed sees as business conditions on the ground across its 12 districts and is among the things Fed policy makers consider in their rate decisions. “Modest” was the key word in the mid-July Beige Book, describing employment and price increases;  report also said five districts saw flat to modest growth in economic activity.

We’ll see if this summer’s solid retail sales and consumer confidence data add some color to today’s Beige Book release, or if the positive news might be counterbalanced by recent data suggesting a softening picture for the labor market and manufacturing. In July, the Fed observed that while some firms were reluctant to raise prices, others reported that “solid demand allowed (firms) to expand margins.” Price expectations were generally flat to lower in July, so that’s another metric to watch for possible adjustment later today when the report hits.

Though the market continues pricing in a heavy chance of Fed rate cuts by the middle of 2024, “There’s a disconnect between what the Fed and data have been signaling and expectations for multiple rate cuts starting early next year,” observes Liz Ann Sonders, Schwab’s chief investment strategist. “Fed Chairman Jerome Powell may have to stress ‘for longer’ as part of the ‘higher for longer’ message.”

Talking technicals: WTI Crude (/CL) prices feel like they’ve accelerated without a brake the last few weeks, which puts front-month futures into chart territory they haven’t seen in many months. CME October futures recently traded at nearly $88 per barrel, putting them 14% above the 200-day moving average of $76.25 per barrel. You have to turn the clock back more than a year, to June 2022, to find the last time futures enjoyed such a premium (after which crude futures dropped by 38%). Past performance doesn’t determine the future, but it’s unusual to see the contract this elevated above the long-term average. 

CHART OF THE DAY: WITHOUT A NET? Crude oil futures (/CL–candlesticks) recently climbed to a 14% premium over the 200-day moving average (blue line). As a history lesson, look to the red line from mid-2022 to see what happened to crude futures the last time they held this high a premium. Data source: CME Group. Chart source: thinkorswim® platform. For illustrative purposes only. Past performance does not guarantee future results.

Thinking cap

Ideas to mull as you trade or invest

Speakers’ bureau: This week is the last chance to get Fed speakers’ views before they go dark prior to the Sept. 19–20 FOMC meeting. Fed Gov. Michelle Bowman and Vice Chair for Supervision Michael Barr are both scheduled to make public appearances this week. Listen to see if they mention two things: higher crude oil prices and last week’s uptick in unemployment. The former could filter into core U.S. inflation, potentially fueling higher chances of a November rate hike, and the latter could signal that the labor market is finally reflecting the effects of the rate-hike cycle that started in March 2022.

Show me the money: Cleveland Cliffs’ (CLF) proposed buyout of U.S. Steel Corp. (X) points up the complications of buyouts that consist partly of stocks, not just cash. Cleveland Cliffs wouldn’t allow U.S. Steel access to inside information bearing on the stock’s value, leading U.S. Steel to reject the cash and stock buyout proposal. It may seem like chutzpah to demand inside information from someone who’s buying your company for billions of dollars, but when you consider that U.S. Steel’s shareholders would be taking on a good portion of that money in the form of shares of the combined company, it starts to sound more reasonable. “Let the buyer beware” applies to both sides in a cash/stock deal.

Drill, baby, drill: Though crude oil and gasoline prices are near 10-month highs, there are signs of possible relief for drivers and transport companies. First of all, the U.S. oil rig count fell by one last week and is down by 148 since the start of the year, according to Baker Hughes (BKR), which could suggest upstream producers see demand for oil products dropping. That wouldn’t be a big surprise, considering the country now enters a time of typically lower seasonal demand both from drivers and airlines with summer vacations mostly in the rear-view mirror. Signs of weakness in China and Europe also work against crude’s continued ascent. The question is whether that might shut the door on a rally that’s lifted the S&P energy sector to nearly 5% gains over the last month.


Sept. 7: Nonfarm Productivity and Unit Labor Costs for Q2.

Sept. 8: July Consumer Credit and expected earnings from Kroger (KR).

Sept. 11: No major earnings or economic data.

Sep. 12: No major earnings or economic data

Sept. 13: August Consumer Price Index (CPI).


Key Takeaways

  • Crude, dollar, yields step back slightly but remain near recent highs, keeping pressure on stocks

  • Volatility up following recent one-month lows, potentially raising chances for sharper market moves
  • ISM Non-Manufacturing Index due soon after the open and expected to show slight pullback

Related Videos

Call Us

Do Not Sell or Share My Personal Information

Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.

Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.

TD Ameritrade and all third parties mentioned are separate and unaffiliated companies, and are not responsible for each other’s policies or services. Inclusion of specific security names in this commentary does not constitute a recommendation from TD Ameritrade to buy, sell, or hold.  unaffiliated companies, and are not responsible for each other’s policies or services.  

Inclusion of specific security names in this commentary does not constitute a recommendation from TD Ameritrade to buy, sell, or hold.


Market volatility, volume, and system availability may delay account access and trade executions.

Past performance of a security or strategy does not guarantee future results or success.

Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.

Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.

This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.

TD Ameritrade, Inc., member FINRA/SIPC, a subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2023 Charles Schwab & Co. Inc. All rights reserved.

Scroll to Top