U.S. equity market gains remain narrow and are concentrated mainly in the largest technology companies, Freedom Broker analysts note. Against the backdrop of deteriorating market breadth, uncertainty around the Fed rate, and rising commodity prices, the S&P 500 outlook has been revised to neutral. The expected trading range for the index is 7580–7820 points.
Read the details in the biweekly market review No. 353 on the website of Freedom Broker.
Market gains were driven by the largest companies
From August 25 to September 8, the S&P 500 added 0.86%, while the equal-weight version of the index fell 1.32%. According to Freedom Broker, this divergence indicates a pause in the rally’s broadening and a high dependence of the overall result on the largest issuers.
Positive returns were posted by 66.7% of the top 15 S&P 500 companies, whereas across the full index only 33.7% of stocks rose. Over the same period, the Nasdaq 100 advanced 1.80%, while the Dow Jones was virtually unchanged, slipping 0.01%.
The S&P Mid Cap 400 lost 0.43%, the S&P Small Cap 600 — 0.97%, and the iShares Russell 2000 ETF — 0.66%. At the same time, 54.7% of small-cap companies and 46.3% of mid-cap issuers finished the period in the green. Analysts attribute the relative interest in these segments to a search for more resilient cash flows and less valuation dependence on changes in Fed policy.
The IT sector became the main source of returns
The best performance among sectors came from information technology, up 4.02%. The main contribution was made by semiconductor makers after reports and forecast updates from Nvidia (NVDA), Broadcom (AVGO) and Marvell Technology (MRVL).
Broadcom expects AI-related revenue to roughly double in fiscal 2027 and continue growing in 2028. Analysts believe that over the next two years this business could develop significantly faster than the company’s traditional semiconductor segment.
Marvell raised its revenue forecast for the current fiscal year by 3.8% versus the prior estimate. Its fiscal 2028 target was increased by $1.5 billion, or about 9.1%, to $18 billion. Revenue at Marvell’s data-center-related division rose 46% year over year in the second quarter. The driver was demand for custom AI chips from the largest cloud customers, including Amazon (AMZN) and Alphabet (GOOGL).
In Nvidia’s case, market focus shifted from demand to supply capacity. The company presented an annual target for the first time as a cap on the available volume of products. The key question for investors now is whether the manufacturer can deliver the stated shipments amid persistent demand for AI accelerators.
Additional support for the sector came from the release of OpenAI’s Astra model. The company called it a step toward a new stage in the development of artificial intelligence and used the term AGI to describe the model’s capabilities. The release strengthened expectations of further growth in demand for computing power, accelerators, networking equipment and custom semiconductors.
Semiconductor valuations reflect high expectations
The semiconductor industry’s forward P/E for 2026 stands at 23.5x versus a three-year average of 22.4x. Thus, expected earnings are already being valued at a premium to the historical level. For 2027, the multiple is 15.1x compared with a three-year average of 19.8x. According to Freedom Broker, this makes the sector relatively more attractive provided that the embedded earnings-growth forecasts are realized.
Over the period under review, the energy sector gained 1.51%. Most other sectors declined. Consumer staples lost 3.28%, real estate — 3.09%, consumer discretionary — 2.87%, materials — 2.13%, industrials — 2.08%, and health care — 1.86%.
The S&P 500 outlook turned neutral
The S&P 500 moved into consolidation around 7690 points. The index is slightly below its 20-day moving average but remains above the 50-day average around 7600 points and an upward trendline, experts emphasize.
The RSI relative strength index points to a balance of power between buyers and sellers. At the same time, the share of S&P 500 components trading above their 50-day moving averages fell to 47%. Against this backdrop, Freedom Broker changed its outlook for the index’s further dynamics to neutral.
Key support is the 7580–7600 zone. A breakdown would raise the risk of a deeper correction. The nearest upside reference remains a return to the high around 7820 points. The expected S&P 500 trading range is 7580–7820 points.
Not an individual investment recommendation.