Your September statement probably looked fine. That’s the trouble. The 10-year Treasury yield leapt from 4.7% to 5.3% during the month, yet the S&P 500 slipped only a little and the Nasdaq-100 gained 3%. Underneath, James Mackintosh reports in his Streetwise column, almost 80% of the index’s stocks fell, and the average one lost 5%. The index didn’t lie. It just didn’t tell you much.
Most of the winners — not all — had AI or data-center supply-chain exposure. Just two of 11 sectors finished higher: tech, and communication services, which got over the line on Meta (META) and Alphabet (GOOGL) while nearly every media and telecom name in the group lost ground. Size mattered, too: small caps in the Russell 2000 dropped 5% on the month while the 50 biggest stocks gained 2%, and inside the S&P itself, 41 of the 100 largest names rose versus only 10 of the 100 smallest.
The strain moves to credit
Everyone outside AI — companies and consumers alike — is paying more for money and fuel while competing with AI firms for workers, gear and capital, Mackintosh writes. Strip out AI and business investment “is running at zero,” says Arend Kapteyn, chief economist at UBS’s investment bank. Credit markets are noticing. For the weakest, CCC-rated borrowers, the premium over Treasurys rose by more than a full percentage point in September, topping the level it hit in the April 2025 tariff selloff; muni and mortgage-bond spreads widened too, as did those of shakier eurozone governments, France and Italy above all. His expectation, absent Middle East peace, a fast spread of AI’s gains or an AI pullback: stocks outside tech struggle, earnings grow more slowly and credit worries build.
Friday’s jobs-report rally lifted most stocks for a day: the S&P 500 rose 0.7% and NYSE advancers beat decliners 1,676 to 1,077. Yet the exchange still logged 134 new 52-week lows against 36 new highs, nearly four to one. One good session doesn’t repair a lopsided month.
Our read
Investments/Risk (IN04): a cap-weighted index is, by design, a bet on whatever’s biggest, and right now that’s mostly one theme. Pull up your 401(k) or index fund and check two things. Concentration first: what share rides on the ten largest holdings, and how much more of the same names do you own directly or through company stock? Then credit: if a bond fund is your ballast, look at its quality breakdown. CCC paper is the slice whose spread just blew past its tariff-panic level, and it tends to fall with stocks rather than cushion them.
Where the desk sits: mega-cap tech, Meta and Alphabet among it, is held at weight; nothing added. The equal-weight S&P fund (RSP) is held in two books, and the reserve’s first purchase there waits for an 8% S&P drawdown — not now. Narrow leadership isn’t a reason to dump the leaders. It’s a reason not to read one number as the whole market. Check the load-bearing walls while the house is still standing; a statement review takes less time than September did.