Covering September Market
September was a strong month for stocks with all three of the major US indexes – the S&P 500, the Dow Jones, and the Nasdaq – hitting new all-time highs.
Gains were fuelled by a combination of factors including expectations of lower interest rates in the US, strength from several mega-cap tech stocks, and blowout earnings from some well-known large-cap businesses.
The best-performing sectors for the period were Technology and Communication Services, which both benefitted from risk-on investor sentiment. Consumer Staples, a more defensive sector, and Materials were the biggest underperformers.
Artificial intelligence (AI) remained a central market theme in September. However, for once, Nvidia wasn’t the star of the show; instead Broadcom and Oracle were the high flyers. Early in the month, Broadcom’s share price shot up on the back of news that it had landed a fourth customer for its custom AI chips (this is believed to be OpenAI) and strong AI guidance for 2026. As for Oracle, it moved sharply higher after the company advised that demand for its data centres and cloud infrastructure (which use Nvidia GPUs) is sky-high.
Other AI stocks that did well included ASML, Lam Research, Applied Materials, and Micron. All of these chip stocks rose more than 20% on the back of expectations of higher demand for their AI solutions.
Note that while Nvidia wasn’t the strongest AI performer in September (with a gain of only 7%), the company was constantly in the headlines. In mid-September, the chip designer announced that it had taken a $5 billion stake in Intel and entered into a strategic co-development agreement with the company, which sent Intel’s share price up 23% in a day. A few days later, it announced that it had made a $100 billion investment in ChatGPT owner OpenAI. This capital will mainly be used to lease Nvidia chips.
It’s worth pointing out that it wasn’t just US AI companies making headlines in September.
There were also many developments in the Chinese AI space. For example, Alibaba unveiled Qwen3-Max, its most advanced large language model yet, intensifying its push beyond e-commerce. Alibaba also said that it will use Nvidia’s physical AI software stack for robotics, humanoid development, and cloud AI applications – a major move in the US-China tech race. Meanwhile, Baidu unveiled its latest reasoning model, Ernie X 1.1. This is an extremely powerful model – in testing, it performed on par with top-tier models such as GPT-5 and Gemini 2.5 Pro while outperforming DeepSeek’s latest reasoning model. Baidu also announced that it had secured a major AI-related deal with state-owned enterprise China Merchants Group (CMG) – one of the oldest and most influential companies in China – which will focus on applications of large language models (LLMs), AI agents, and digital employees. During the month, it came to light that both of these companies are now using internally-designed chips for AI.
This move is strategically aligned with Beijing's aggressive push for the development and adoption of domestically produced AI chips.
Zooming in on the Magnificent 7, Tesla delivered the best returns of the group in September. It shot up after CEO Elon Musk announced a $1 billion open market stock purchase, boosting investor confidence. Alphabet also performed well. Its share price rose significantly on the back of a favourable antitrust ruling and optimism over AI – and, during the month Gemini overtook ChatGPT to become the most downloaded app in Apple’s App Store.
On the economic front
The US Federal Reserve delivered its first rate cut of the year, lowering rates by 0.25% to between 4% and 4.25%. At the Fed’s meeting, Chair Jerome Powell repeatedly emphasised “downside risks” to employment (US unemployment climbed to 4.3% in August) and signalled that there are likely to be more rate cuts on the way (economists expect up to three cuts in 2025 now).
In Europe, the European Central Bank (ECB) held interest rates steady at 2%, stating that rates are in a “good place” given stable inflation and a slightly improved near-term growth outlook. The Bank of England also held its rate steady at 4% due to inflation being nearly double its 2% target.
Bond yields were quite volatile, with both the US 10-year and 2-year Treasury yields falling sharply in the first half of the month before bouncing back in the second half. The 10-year ended the month at 4.1%, after falling below 4% at one point, while the 2-year Treasury yield ended the period at 3.6% – roughly flat. The lower 10-year boosted small-cap stocks with the small-cap Russell 2000 Index hitting new all-time highs during the month. Smaller businesses tend to benefit disproportionately from lower rates due to their greater reliance on short-term loans.
Turning to commodities
Precious metals shone, with gold hitting new all-time highs on the back of falling yields and concerns over Federal Reserve independence (US President Donald Trump is attempting to remove Fed Governor Lisa Cook and replace her with his ally).
In a research note, analysts at Goldman Sachs suggested that gold could potentially hit $5,000/oz in 2026 if Fed independence is compromised.
The strength in gold pushed gold mining stocks higher. Silver also did well, hitting levels not seen since 2011.
Late in the month, oil had its best week in more than three months, with WTI futures rising above $66 on the back of Russia-related supply concerns. However, it then experienced a sharp pullback as a result of concerns in relation to increased production from OPEC+ and ended the month in negative territory.
Finally, for crypto, it was an up-and-down month.
At one stage, Bitcoin traded as high as $118,000, however, after some large liquidations, it ended the period near $114,500 – about 5% higher than where it started. As for Ethereum – which has outperformed BTC in 2025 on the back of excitement about potential use cases – it gave back some of its gains. It ended the period at $4,190, down about 5%.
