Wednesday's session ended on a decidedly weaker note after a sharp final-hour selloff erased earlier gains, putting an exclamation point on a September marked by increasingly narrow market leadership. The S&P 500 (-0.3%) and DJIA (-0.9%) finished near their session lows, while the Nasdaq Composite (+0.2%) held onto a slim gain despite giving back most of an earlier 1.0% advance.

The reversal left the S&P 500 down 0.5% for September and the DJIA down 4.3%, while the Nasdaq Composite still finished the month with a 1.9% gain. That divergence reflected one of the defining features of September: strength in mega-cap growth and AI-related stocks contrasted with considerably weaker performance across much of the broader market. That pattern was evident again for much of today's session. The Vanguard Mega Cap Growth ETF rose 0.4% and finished September up 3.2%, while the information technology sector (+0.6%) was the day's best-performing sector and gained 4.4% for the month.

Software stocks were particularly strong, with the iShares Expanded Tech-Software Sector ETF (IGV) gaining 1.2%. Semiconductor stocks were little changed today, leaving the PHLX Semiconductor Index flat, but the group was one of September's clear standouts with a 9.5% monthly gain.

Micron (MU 1065.11, +0.03, +0.00%) will put that strength back in focus when it reports earnings after today's close, with investors looking for indications that strong memory pricing and AI-related demand can continue to support growth as capital spending rises.

There were several pronounced moves elsewhere in the technology landscape. Hewlett Packard Enterprise (HPE 63.89, +2.40, +3.90%) was a standout after raising its Networking outlook and increasing its expected Juniper cost synergies ahead of its Networking Investor Day. Jabil (JBL 286.76, -32.08, -10.06%), meanwhile, was among the session's weakest stocks despite better-than-expected results and an upbeat outlook, as elevated expectations surrounding its AI-driven growth prospects tempered the response.

The communication services sector (flat) surrendered a sizable earlier gain as Meta Platforms (META 725.18, -13.61, -1.84%) and Alphabet (GOOG 340.74, +3.42, +1.01%) sold off sharply into the close, contributing to the broader market's late retreat. Still, the sector gained 4.3% in September.

The consumer discretionary sector (+0.1%) was the only other S&P 500 sector to finish above its flat line today, supported by strength in Amazon (AMZN 249.15, +2.48, +1.01%).

Weakness was much more pronounced elsewhere by the close. The consumer staples sector (-1.7%) finished at the bottom of the standings, followed by the health care (-1.4%), industrials (-1.3%), and financials (-1.2%) sectors. Moderna (MRNA 192.57, -10.89, -5.35%) was a notable laggard in the health care sector after being downgraded to Sell from Neutral at Citigroup.

Breadth deteriorated substantially as the session progressed, with decliners ultimately outpacing advancers by roughly 9-to-5 on the NYSE and by a slim margin on the Nasdaq. The Russell 2000 (-0.3%) and S&P Mid Cap 400 (-0.5%) also finished lower, extending their September losses to 5.3% and 4.3%, respectively. Their monthly declines stand in sharp contrast to the gains for mega-cap growth, technology, and semiconductor stocks and underscore just how concentrated the market's September leadership became.

Earlier support came from slightly cooler-than-expected inflation data. The August PCE Price Index increased 0.3% month-over-month (Briefing.com consensus: 0.4%), while the core PCE Price Index rose 0.2% (Briefing.com consensus: 0.3%). The data increased expectations for the Fed to leave rates unchanged at its October meeting, although Treasury yields remained elevated and provided little relief for the broader market as inflation still remains firmly above the Fed's target. 

Crude oil also moved higher after yesterday's sharp decline, settling $1.28 higher (+1.4%) at $90.54 per barrel. CNBC reported that crude oil exports through the Strait of Hormuz have returned to pre-war levels, although refined-product flows remain constrained.

Ultimately, the final session of the third quarter captured many of the trends that defined September. Mega-cap growth, technology, and AI-related stocks produced substantial gains, but that strength was accompanied by significant weakness across smaller companies and many areas of the broader market. Wednesday's late selloff only sharpened that contrast, leaving the Nasdaq higher for the month even as the S&P 500, DJIA, Russell 2000, and S&P Mid Cap 400 all finished September in negative territory.

U.S. Treasuries gave participants a head fake today when yields moved quickly lower following some better-than-feared PCE inflation data in the August Personal Income and Spending report at 8:30 a.m. ET. The realization that a 3.4% PCE inflation rate (3.0% for core) is still well above the Fed's 2.0% target soon set in, however, and that initial move was unwound. The 2-year note yield finished unchanged at 4.89% (+55 basis points this month), and the 10-year note yield settled up four basis points to 5.30% (+56 basis points this month).

• Nasdaq Composite: +15.6% YTD
• Russell 2000: +12.7% YTD
• S&P 500: +11.8% YTD
• S&P Mid Cap 400: +8.8% YTD
• DJIA: +5.9% YTD