With the question of whether the Fed chair can proceed with rate hikes without fearing Trump's anger becoming the focus, the market was unsettled by higher oil prices and rising interest rates. The Dow Jones Industrial Average fell for 3 consecutive days, although a modest rebound was seen the following day.
The US stock market was highly volatile from the end of August into early September. On 31 August, the Dow Jones Industrial Average fell amid declines in major stocks and higher oil prices, with a year-on-year decline in focus. It fell again on 1 September amid reports of air strikes and higher energy prices. Although some buying back was seen on 2 September, rising long-term interest rates and persistently high oil prices remained an overall drag.
As debate intensified over the Fed's rate-hike policy, long-term interest rates at times reached the 4.8% range, and investors grew wary of the prospect of further rate increases. Reports concerning comments by the Fed chair and the broader inflation trend influenced the market's direction.
The effects also spread to the Chinese and Japanese markets, with reports focusing on trends in China's manufacturing PMI, the policies of the National People's Congress, and the performance of the Nikkei 225. The Nikkei 225 fell sharply on 2 September, affected both by concerns that AI and semiconductor-related stocks had become overheated and by rising interest rates.
Rising long-term interest rates have been linked to expectations of expanding fiscal deficits, and the market outlook is expected to be influenced by the direction of oil prices.