Market Trends as September Winds Down

September still has two trading days left, which means a lot could change. But can anything really erase the monthly gains we’ve seen across major indexes? It’s an open question.

Right now, we’re looking at a drop of about 183 points for the S&P 500, 702 points for the Dow Jones, over 1,000 points for both the NASDAQ and NASDAQ-100, and 57 points for the Russell 2000. Those aren’t insignificant numbers.

But it seems unlikely we’ll see a massive downturn. A significant catalyst—something truly surprising—is needed to trigger a decline.

What might that catalyst be? Perhaps it’s a geopolitical issue. For instance, if the Supreme Court allows certain tariffs to rise, we might see impacts ripple through the markets.

Then again, maybe it’ll be something like the collapse of major corporations or banks. Usually, when such things happen, whispers of trouble begin well in advance. Just think back to the market crashes of 1987 and 2008; the signs were there long before the real issues hit.

Last week, most stocks took a hit.

• The S&P 500 dipped 0.3% to 6,644.
• The Dow fell 0.2% to 46,247.
• The NASDAQ dropped by about 0.7% to 22,484.07.

However, as we enter the final days of September, we’re still looking at a stock market that’s either at or near record highs, largely due to the dominance of tech and AI-focused companies.

The top ten companies, including Nvidia, Microsoft, and Apple, account for roughly $20.7 trillion, nearly 38% of the total market value of the S&P 500.

There’s a lot of speculation about what’s next. The S&P 500 closed at 6,644 on Friday, reflecting a nearly 13% increase for the year. Some analysts thought we might have reached the top for this year.

Goldman Sachs and Deutsche Bank have upped their target to 7,000 by early 2026. That’s a ways off, though.

On the flip side, there are concerns that spending on AI could spiral out of control. Some are even throwing around the term “bubble.”

Remember that, at the end of August, the ten largest companies held about 38.7% of the S&P 500 market value. It’s a significant chunk.

Data from GQG Partners, a Florida-based investment firm, indicates such situations have led to bear markets in the past, the last of which was back in October 1970.

They called their report “Play on Fire,” suggesting that while this year has been exciting, caution is warranted.

But the revenue from AI investments could be substantial, and there are expectations that money poured into AI infrastructure in the coming years could lead to excellent returns.

As per the Wall Street Journal, investments in AI infrastructure are projected to yield impressive results, with around $800 billion expected to be spent in this area over the lifespan of current tech.

This week is relatively quiet in terms of earnings reports, with the third-quarter results expected to ramp up soon. Delta will report on October 9th, followed closely by JP Morgan Chase.

• Carnival, a major cruise line, is set to report on Monday.
• Investment bank Jefferies will also release earnings on Monday.
• Nike, renowned for its athletic gear, is scheduled for Tuesday.

Carnival and other cruise lines have been thriving lately, anticipating about $8.1 billion in revenue—an increase of 2.4%—with earnings expected to be up 3.2%. They’ve seen a 22.9% rise in stocks this year.

On the other hand, Jefferies has been down 14.9% this year, although it’s bounced back 58% from its April low.

Nike, meanwhile, is navigating a challenging consumer market, with revenue estimates down 5.2%, suggesting difficulties in their turnaround efforts.

Overall, while the market isn’t showing signs of a crash just yet, the unpredictability remains. A mix of factors could influence the next few weeks: heightened scrutiny on AI spending, unexpected tariff complications, and broader global economic stresses.