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We're a team of investment advisers committed to protecting the financial future of our clients.
On the radio show and in this space as well we’ve talked about how September is traditionally the absolute worst-performing calendar month for the S&P 500. Since 1928, the average September loss for the S&P is 1.13%. While September 2026 was slightly better than that trend (the S&P was down 0.5%), as the chart below powered by YCharts illustrates – 10 of the 11 sectors covered by State Street Select’s Sector SPDR ETF’s were in negative territory. The very strong outlier? Technology.
The technology sector’s dramatic outperformance becomes even more striking when contrasted against the S&P 500 index. During this late-summer stretch, a traditional cap-weighted benchmark would have felt immense downward gravity. Because ten out of eleven market sectors finished in the red—with major pillars like Materials, Financials, and Real Estate plunging over 7%—most the index's underlying constituents were in a steep correction. In a typical market cycle, such widespread bleeding drags the entire benchmark down into a deep, synchronized retreat.
However, because the modern S&P 500 is heavily top weighted by mega-cap technology and communication design companies, the 4.96% surge in the XLK Technology ETF acted as an incredibly powerful counterweight. This stark divergence illustrates a "two-speed market." On one path, the equal-weighted reality of the average stock was suffering under the weight of macroeconomic pressures, dragging down cyclical and defensive sectors alike. On the other path, a highly concentrated cluster of secular growth engines defied that gravity entirely. For investors benchmarked against the S&P 500, portfolio returns during this window were entirely dictated by their exposure to this single, resilient tech channel.
“This presentation is not an offer or solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable, but its accuracy is not guaranteed and should not be relied upon in any way, whatsoever. Fagan portfolio characteristics and holdings are subject to change at any time and are based on a representative portfolio. Holdings and portfolio characteristics of individual client portfolios may differ, sometimes significantly, from those shown. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities listed.
Additional information including management fees and expenses is provided on our Form ADV Part 2. The actual return and value of an account fluctuate and, at any time, the account may be worth more or less than the amount invested. Bond Investments are affected by interest rate changes and the credit-worthiness of the issues held in the portfolio. A rise in interest rates will cause a decrease in the value of fixed income positions. Past performance results are not indicative of future results.”
As is illustrated by the chart below, provided by Yahoo! Finance - During Calendar ending July26th 2026 (Q2 Fiscal 2027), NVIDIA reported revenue of $96.2 billion, up 106% from a year earlier and 18% from the previous quarter.Data Center revenue reached $89 billion, increasing 117% annually as demand for AI computing infrastructure continued to expand.These results underscore NVIDIA’s central role in supplying the technology powering the AI buildout.
On a related note, this past week NVIDIA announced a $150 billion share repurchase program that was in addition to a previously authorized $85 billion that has yet to be completed. The company expects to execute the remaining program through fiscal 2028. As this is an authorization to repurchase outstanding shares, the net impact of fewer shares available to the public is higher earnings per share than they would have been otherwise. On an absolute basis, $150 billion is a huge number. However, keep in mind that it is only 2.5% of their market cap!
NVIDIA’s buyback is historic, as it is the largest in history. However, they do not, by themselves, guarantee positive returns. Nonetheless, they are an indication that Nvidia believes in the business prospects of the company and therefore considers the current stock price, a value. This in turn reinforces our optimism in technology and that companies will continue to spend on this AI buildout.
“This presentation is not an offer or solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable, but its accuracy is not guaranteed and should not be relied upon in any way, whatsoever. Fagan portfolio characteristics and holdings are subject to change at any time and are based on a representative portfolio. Holdings and portfolio characteristics of individual client portfolios may differ, sometimes significantly, from those shown. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities listed.
Additional information including management fees and expenses is provided on our Form ADV Part 2. The actual return and value of an account fluctuate and, at any time, the account may be worth more or less than the amount invested. Bond Investments are affected by interest rate changes and the credit-worthiness of the issues held in the portfolio. A rise in interest rates will cause a decrease in the value of fixed income positions. Past performance results are not indicative of future results.”
Last Wednesday, the Federal Open Market Committee (FOMC) voted unanimously to raise the benchmark interest rate a quarter of a percentage point, the first rate hike in over three years (July 2023). The forward-looking guidance suggested that a further increase in 2026 is likely. Historically speaking, how does a rate hiking cycle impact the stock market? As the chart below from Charlie Bilello with Creative Planning illustrates, the answer might surprise you.
The chart breaks down the S&P 500 average forward total returns dating back to 1982, analyzing 5 distinct time horizons after two contrasting policy environments: rate hikes (blue) and rate cuts (red). The key takeaway obviously being that historically speaking, S&P 500 returns are higher following rate hikes than rate cuts across every measured time frame.
This counterintuitive trend stems from the underlying economic context of Fed policy. The central bank typically raises interest rates to cool down a strong, expanding economy that is experiencing high inflation. During these tightening cycles, robust corporate earnings and economic momentum often override the headwinds of higher borrowing cost, driving steady long-term equity growth.
Conversely, the Fed generally cuts interest rates as an emergency response to an economic slowdown, recession, or market crisis. While lower rates are designed to stimulate growth, the early stages of a rate-cutting cycle often overlap with declining corporate profitability and broader economic pain, resulting in slightly lower average returns compared to expansionary hiking periods.
Ultimately, the data highlights that the long-term trajectory of the stock market is determined more by fundamental economic health than the direction of interest rates alone.
“This presentation is not an offer or solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable, but its accuracy is not guaranteed and should not be relied upon in any way, whatsoever. Fagan portfolio characteristics and holdings are subject to change at any time and are based on a representative portfolio. Holdings and portfolio characteristics of individual client portfolios may differ, sometimes significantly, from those shown. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities listed.
Additional information including management fees and expenses is provided on our Form ADV Part 2. The actual return and value of an account fluctuate and, at any time, the account may be worth more or less than the amount invested. Bond Investments are affected by interest rate changes and the credit-worthiness of the issues held in the portfolio. A rise in interest rates will cause a decrease in the value of fixed income positions. Past performance results are not indicative of future results.”
