September Monthly Report: ES Small Caps

At first glance, September seemed like a quiet month. The S&P 500 held up reasonably well, posting a loss of -0.45%. Beneath the surface, however, the picture was quite different: most stocks fell, market breadth was exceptionally weak, and the index’s return was driven by a small number of stocks. By contrast, the equally weighted S&P 500—in which each stock has equal weight—fell by approximately -4.8%.

Goldman Sachs noted that market breadth has fallen to its lowest level since the dot-com era in the late 1990s. Less than half of the S&P 500 index constituents were trading above their 200-day moving average.

The Small Cap index—the Russell 2000—posted a loss of -5.46%. ES Small Caps achieved a positive return of +2.84%.

This month, Delek US Holdings was the worst performer in the portfolio. CareDx, on the other hand, was the best-performing stock.

Why so many stocks fell

• First, bond yields rose. The Federal Reserve raised interest rates by 0.25 percentage points and left the door open for further tightening. Higher yields put particular pressure on interest-rate-sensitive sectors.
• Second, energy prices remained high. This fuels inflation concerns and squeezes the margins of companies that cannot fully pass on their costs. As a result, consumer spending and affordability came under additional pressure.
• Third, there was little enthusiasm outside the AI theme. Investors focused on companies that benefit directly from the wave of AI investment.

Looking ahead to the coming months, the question remains whether market breadth will recover; lower interest rates or reduced macroeconomic uncertainty would certainly help in that regard.

Sincerely,

Henry van Ginkel

www.exclusivesignals.com

T: +316-4184 97 85

info@exclusivesignals.com