TLDRSeptember saw the Nasdaq Composite rise 1.8% and reach a fresh high on September 22, while the S&P 500 slipped 0.4%.The Dow Jones Industrial Average tumbled approximately 4.3% and the Russell 2000 declined 5.4% throughout the month.Bond yields jumped to levels not seen in decades, with significant increases across 2-year, 10-year, and 30-year Treasuries.According to UBS, artificial intelligence investment and related equity gains now represent 80% or more of American economic expansion.September’s top Nasdaq performers included Intel, Advanced Micro Devices, and Meta Platforms.September delivered a tale of two markets on Wall Street, with artificial intelligence stocks providing crucial support to certain indexes. The S&P 500 registered a 0.4% monthly loss as government bond yields advanced. The benchmark index now sits 1.9% beneath its all-time high established in August.Historically, September ranks among the weakest months for equity performance. Data extending back to 1950 shows the S&P 500 averaging a 0.6% drop during this period.The Nasdaq Composite, however, painted a contrasting picture. The tech-heavy index advanced 1.8% and established a fresh record on September 22, finishing the month at 26,861.06 points.Nasdaq 100 Dec 26 (NQ=F)Technology heavyweights including Meta and AMD provided significant upward momentum for the Nasdaq. Multiple semiconductor companies additionally contributed to the index’s positive performance.Blue Chips and Small-Caps Lag as Technology Sector DominatesThe gains weren’t universally distributed across indexes. The Dow Jones Industrial Average surrendered approximately 4.3% during September.The Russell 2000 index, representing smaller-capitalization companies, declined 5.4%. Steve Sosnick, chief strategist at Interactive Brokers, captured the market divide succinctly. “It’s AI or bust,” he remarked.Sosnick further noted that even with the Nasdaq and S&P 500 demonstrating strength relative to other benchmarks, underlying concerns persist.Government bond yields emerged as a significant driver of monthly turbulence. Both the 2-year and 10-year Treasury yields increased by approximately 50 basis points.The 30-year Treasury yield jumped nearly 40 basis points from August’s conclusion. The previous instance of all three bond maturities experiencing comparable simultaneous movement occurred in September 2022.Elevated yields have also impacted the initial public offering landscape. Oura, the smart-ring manufacturer, delayed its anticipated equity offering this week.Additional companies including Holtec Nuclear and Bamboo Insurance have attributed uncertain market environments to their decisions to postpone planned public listings.Anthropic has allegedly deferred its expected public market entry from October to November. The offering had been projected to represent the fourth quarter’s largest IPO.Artificial Intelligence Expenditures Dominate American Economic ExpansionArend Kapteyn, chief economist at UBS, indicated that AI-focused investment combined with wealth generated from appreciating AI equities currently comprises 80% or more of American economic growth.“It just looks like AI is neutralizing everything, at least on an aggregate level,” Kapteyn stated.UBS elevated its projection for AI-driven capital expenditures next year by $200 billion, establishing a new total of $1.4 trillion. Kapteyn characterized spending beyond the AI sector as “running at zero.”This market concentration introduces potential vulnerabilities. Kapteyn observed that ascending AI stock valuations have bolstered consumer expenditures, particularly among affluent households.Should the AI momentum reverse course, economic consequences could materialize through two channels: diminished corporate investment and reduced consumer spending.UBS has identified emerging indications that the expansion is extending beyond technology. Kapteyn explained that each dollar allocated to AI capital during a given quarter typically generates approximately $1.50 in investment during the subsequent quarter, with merely one-third returning to technology.Examining individual equity performance, Intel surged 34.32% throughout September, claiming the top position among Nasdaq constituents. AMD advanced 29.96%, while Meta climbed 26.70%.Marvell Technology and Astera Labs similarly recorded double-digit monthly appreciation.Some equities experienced significant headwinds. Axon Enterprise plummeted 25.42%, representing the month’s steepest decline among major losers.Intuit, Paychex, DoorDash, and Autodesk similarly registered double-digit percentage losses during September.Market observers anticipate October will deliver continued volatility. The Federal Reserve’s upcoming interest rate determination and escalating US-Iran geopolitical tensions both represent potential catalysts.Expectations regarding another rate increase have moderated following New York Fed President John Williams’ indication that no urgency exists for additional rate adjustments.The post Nasdaq Surges on AI Rally While Dow Jones and Russell 2000 Tumble in September appeared first on Blockonomi.