A Wall Street Journal report said the divide inside the U.S. equity market widened sharply in September, even as headline indexes masked the weakness underneath. The S&P 500 was roughly flat and the Nasdaq 100 gained 3%, but nearly 80% of S&P 500 constituents fell, with an average decline of about 5%. Of the index’s 11 sectors, only technology and communication services posted gains.
The report also pointed to a growing gap between large-cap winners tied to artificial intelligence and the rest of the market. The Russell 2000 fell 5% during the same period, while the 50 largest companies by market value rose 2%. Stocks that advanced in September were broadly linked to AI or the data-center supply chain.
At the same time, non-AI businesses were dealing with higher financing costs, rising energy prices, and competition from AI companies for workers, equipment, and capital. UBS chief economist Arend Kapteyn said U.S. capital spending is “basically zero” once AI tech companies are excluded. The Journal added that credit spreads have started to widen, with spreads on CCC-rated bonds rising by more than 1 percentage point in September, while Wall Street has also begun to trim its expectations for earnings growth.
BlockBeats reported on Oct. 3, citing The Wall Street Journal, that the split inside the U.S. stock market widened sharply in September.
The S&P 500 was roughly flat and the Nasdaq 100 rose 3%, but nearly 80% of stocks in the S&P 500 declined, with an average drop of about 5%. Of the index’s 11 sectors, only technology and communication services moved higher.
Over the same period, the Russell 2000 fell 5%, while the 50 largest companies by market capitalization gained 2%. Stocks that rose in September were generally tied to AI or the data-center supply chain.
The report said the yield on the 10-year U.S. Treasury jumped from 4.7% to 5.3%. Non-AI companies were also facing pressure from interest rates, energy prices, and competition from AI companies for workers, equipment, and capital.
UBS chief economist Arend Kapteyn said that, excluding AI technology companies, U.S. capital spending is “basically zero.”
As financing costs climbed, corporate credit spreads also began to widen. Spreads on lower-rated CCC bonds rose by more than 1 percentage point in September and moved above levels seen during last year’s U.S. tariff shock.
Wall Street has also started to cool its expectations for earnings growth. Christian Mueller-Glissmann, head of asset allocation research at Goldman Sachs, said earnings and earnings expectations grew quickly in the first half of the year, but that momentum has weakened since the summer.
The article said that if bond yields and oil prices stay elevated, sectors outside AI may remain under pressure, earnings growth could slow, and concerns over credit risk may continue to build.
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