Market Bloodbath: S&P 500 Shed $1.7 Trillion so Far in September, Outstripping Crypto Market Downturn

The stock market’s benchmark index, the S&P 500, has seen its total market capitalization drop by around $1.7 trillion so far in September ahead of expected interest rate cuts from the Federal Reserve later this month.

According to the economics outlet Kobeissi Letter on the microblogging platform X (formerly known as Twitter), the stock market hasn’t seen a single positive day so far this month, with the S&P 500 having already dropped by more than 3% in the first week of the month.

The stock market has not seen a single green day in September yet.

Including today’s drop, the S&P 500 is now down 3.4% this month and it’s only the first week.

That’s $1.7 trillion of S&P 500 market cap erased so far.

Maybe rate cuts aren’t what the market wants after all. pic.twitter.com/qWF8ZDbIFg

— The Kobeissi Letter (@KobeissiLetter) September 6, 2024

Notably, the cryptocurrency space’s total market capitalization is around $1.9 billion, meaning that in just a week the S&P 500 has nearly erased the entire cryptocurrency space’s market capitalization after its recent correction.

The price of Bitcoin is down by more than 7% over the past seven-day period to now stand just above the $54,000 mark, while the second-largest cryptocurrency by market capitalization Ethereum ($ETH) lost 6.9% of its value to now trade at around $2,290.

The cryptocurrency space has in the first week of September lost around $100 billion of market capitalization, a testament to its relatively small size, as equities lost over $1 trillion in a single session earlier this month over a massive Nvidia (NVDA) correction.

On top of Nvidia’s slowing growth, two manufacturing activity indicators have shown continued sluggish activity in the sector that has been affected by high interest rates. Later this week, the US August jobs report will be released and could lead to further volatility, as last month a hotter-than-expected unemployment reading led to a stock market drawdown.

Notably, according to Investopedia, September is the only calendar month that, over the last 98 years, has recorded negative returns in the stock market, leading to what’s known as the September Effect, which refers to the market’s underperformance during the month.

A mystery trader has managed to make more than $10 million betting on volatility rising this month, which also negatively affects the cryptocurrency space. CCData has revealed that the September Effect is also present in the cryptocurrency space, with Bitcoin’s September performance from 2010 to 2023 averaging a negative return of 4.5%.

/1 In this week’s Chart of the Week, we analyse Bitcoin’s performance from September 2010 to 2023.

While history doesn’t repeat itself, September has consistently been one of the worst months for Bitcoin, with only 6 positive Septembers recorded in the asset’s history. pic.twitter.com/RKQhEQpev8

— CCData (@CCData_io) September 3, 2024

In those 13 years, the data shows that Bitcoin’s price performance in September was only positive six times. In contrast, April, November and October have seen average returns of 35.6%, 39.2%, and 28.7% respectively.

Featured image via Unsplash.

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