To Summarize: September was a mixed month for the markets. Large technology companies lifted the S&P 500 and Nasdaq, while smaller companies lost some ground. Oil continued to climb and bonds sold off as the Federal Reserve (Fed) moved interest rates higher. While the economy looks strong, borrowing costs have reached levels not seen since 2008.
The big takeaway – A strong economy is supporting higher rates, but AI-driven borrowing and rising oil prices are pushing the cost of capital to 2008 levels.
In the markets: Large U.S. technology companies led gains in September, pushing the Nasdaq up 2.7%, while small caps declined 4%. For the year, emerging markets remain the top performer, up 25.5%.[1] Only three sectors gain ground this month: technology, communication services, and healthcare. At the same time, oil’s 65% climb continues to put pressure on inflation and corporate margins. Meanwhile, corporate profits reached record highs, but share prices grew at a slower pace, bringing valuation multiples down as investors weigh whether AI-driven earnings growth is sustainable.
The cost of capital climbs: Borrowing costs have reached the highest levels since 2008, with the 10-year treasury yield above 5%. AI-related companies now account for 54% of investment-grade bond issuance,[2] which has pushed rates higher for other borrowers. As a result, CFOs are now ranking interest rates ahead of inflation as their top concern as we head into Q4.
A strong economy keeps businesses spending: The Federal Reserve Bank of Atlanta estimates that the economy is growing at nearly a 5% rate this quarter, and business equipment orders are running nearly 15% above levels from last year. Data centers now make up close to 10% of total construction spending, creating scarcity and higher prices for resources like labor and copper.[3]
Top Headlines: We’re reading about how AI is reshaping the workplace from why companies are adding employees after adopting new technology and its expanding role in aerospace and defense to Meta’s push to make AI tools more accessible to small businesses.
Related resources:
- AI: How workers are unlocking new ways of working
- AI & Jobs: We can finally say AI isn’t killing jobs
- Aerospace, Defense & Government: Three truths about AI in aerospace and defense
- Technology & Small Business: Meta is bringing Muse AI to small businesses – and it already has a huge head start
[1] All performance in this email is through 9/25/26.
[2] Source: Apollo Global Management
[3] Source: Bloomberg Finance, LP
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