About 75% of S&P 500 component stocks declined in September, even as the overall index remained stable at just 1% below its August record. This divergence is explained by the concentration of gains on a handful of large-cap stocks like Apple, Nvidia, Alphabet, Microsoft and Meta. The proportion of S&P 500 stocks trading above their 200-day moving average fell to 49%, versus roughly 75% during the summer. This dynamic reflects defensive investor behavior, fleeing high-beta stocks in favor of more resilient names. Morgan Stanley recommends sticking with large-cap quality and adding riskier positions in October.
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