QQQ outperformed the S&P 500 in September, rising 3.28% at NAV versus the S&P 500’s -0.35% decline. Equity markets were bifurcated and periodically unsettled in September, with less upside participation and fewer winners. Equity market breadth was narrow, however, artificial intelligence (AI)-driven momentum continued in September, supporting gains among select mega-cap growth and technology stocks. Macro-economic headwinds created drag across the broader US equity landscape with the brunt being felt most significantly within the value segment and smaller stocks on the market capitalization spectrum. Equity market volatility was elevated, but largely rangebound, with a few notable spikes during the month. Surging oil prices, rising treasury yields, and growth uncertainty surrounding rate path expectations all contributed to volatility throughout the month.
Investors appeared to prefer larger-capitalization and growth stocks over small-cap and value stocks in the month. Mega-cap growth, represented by the Nasdaq-100 Index, was the top performer out of the referenced indices, returning 3.30%. The Russell 1000 Growth Index posted a gain of 2.16% but still trailed the Nasdaq-100. Large-cap securities, represented by the S&P 500 Index, declined -0.35%, lagging growth and mega-cap stocks. The S&P 500 Equal Weight Index declined -4.81%, while the Russell 1000 Value Index fell -3.13%, as market breadth remained narrow and macro headwinds weighed more heavily on value stocks. Small-cap stocks, represented by the Russell 2000 Index3, were the weakest segment, declining -5.25%. Mid-cap stocks, represented by the S&P MidCap 4004, faired only slightly better, declining -4.22%.
In September, the macroeconomic releases were mixed demonstrating a generally resilient, but unsteady picture. The ISM Manufacturing Survey fell to 54.6, slightly below consensus estimate, while the ISM Services Index rose to 55.4, slightly above consensus estimate. The August non-farm payrolls announced on September 4 rose 162k, above every estimate recorded in a Bloomberg survey and far exceeding the consensus estimate of 55k. The US unemployment rate remained unchanged at 4.1%, while labor participation increased incrementally. The strong upside surprise in non-farm payrolls reinforced the market’s already rising expectation of an announced rate hike following the September Federal Reserve FOMC meeting.
The most significant and most closely watched macro-economic event of the month was the Federal Reserve’s FOMC meeting which occurred on September 16. US Treasury yields steadily rose throughout the month as expectations surrounding a potential rate hike resulting from the upcoming September Fed meeting increased. A resurgence in oil prices raised more inflationary concern with both Brent Crude5 and West Texas Intermediate (WTI)6 crossing above $100 per barrell for the first time since May, further exacerbating the selloff in US Treasuries. On September 15, the US 10-Year Treasury yield closed at 5.00%, the highest closing level since July 19, 2007. Ultimately, the US 10-year Treasury yield increased 0.53% to a closing level of 5.28%.
Inflation readings helped further cement the market’s expectations of an upcoming rate hike. The headline Consumer Price Index (CPI)7 rose 0.4% month over month and 3.4% year over year. Despite both prints being in line with expectations, the market found the inflation prints as further evidence that the FOMC would likely raise interest rates.
As was anticipated by markets, the Federal Reserve FOMC committee announced a unanimous decision to hike the Fed Funds rate8 by 0.25% to a new range of 3.75% – 4.00%. Federal Reserve Chairman, Kevin Warsh presented the decision as further support for a “timelier” return towards the Fed’s inflation target of 2% mentioning that the committee would deliver price stability. In his statement, Chairman Warsh described growth as solid, spending as resilient, and the labor market as experiencing little change, with inflation still elevated.
In terms of significance, the reported future rate projections from the FOMC may have been potentially more impactful than the announced 25 basis point9 rate hike. The median participant projected the fed funds rate at 4.1% by the end of 2026 and maintaining 4.1% by the end of 2027, signaling one additional hike by year end with no cuts in 2027. The market initially took the projections as evidence of a regime shift quickly moving to price in a chance of another 0.25% hike at the October FOMC meeting.
One of the nine sectors represented in QQQ finished September in positive territory. Technology was the best performing sector, returning 7.39%. Energy was the worst-performing sector, returning -11.11%, followed by Industrials and Consumer Staples, which returned -7.85% and -7.75%, respectively.
QQQ’s relative outperformance versus the S&P 500 was primarily driven by its differentiated holdings in and average overweight to the Technology sector. QQQ’s Technology holdings average weight was 67.04% and returned 7.39% in September, while the S&P 500’s Technology holdings average weight was 44.77% and returned 5.17%. QQQ had an average overweight of 22.27% to the Technology sector in the month.
QQQ’s overweight in the Consumer Discretionary sector was the greatest detractor from the fund’s relative performance. QQQ’s Consumer Discretionary holdings average weight was 16.05% and returned -5.51% in September, while the S&P 500’s Consumer Discretionary holdings average weight was 11.79% and returned -5.39%. QQQ had an average overweight of 4.26% to the Consumer Discretionary sector in the month.
On September 18, the Nasdaq 100 and QQQ underwent their quarterly rebalance. Resulting changes were relatively minimal with the most significant change occurring regarding the weight to Space Exploration Technologies, commonly known as SpaceX. Following the quarterly rebalance, the weighting of SpaceX increased from 1.28% to a weight of 2.82% effective September 22nd. This change is a result of increasing free float10 as a result of expiration of lock up provisions following the company’s initial public offering (IPO) on June 12, 2026.11 Additionally, SpaceX had some notable developments and a major milestone in September. On September 28, SpaceX’s Starship rocket reached orbit for the first time, successfully deploying 26 upgraded Starlink V3 satellites, an event which analysts considered a major milestone for the company. SpaceX shares increased 4.99% in September.
On September 28, NVIDIA, the world’s leading provider of AI computing infrastructure, announced a $150 billion expansion to its share repurchase program. The announcement signaled the confidence of management at Nvidia in the company’s cash generation and more broadly in its future longer-term growth potential driven by its position in the rapidly growing artificial intelligence arena. Additionally, Nvidia announced the acquisition of Hugging Face, an AI model platform, for $12.9 billion, further deepening the company’s position across the AI software stack. NVIDIA shares increased 3.44% in September.
Meta Platforms also had significant news in September regarding their own developments within artificial intelligence. On September 8, Meta released Meta Muse, a personal AI agent designed to take action on users' behalf. Meta described it as an AI agent that can send emails, manage schedules, book travel, complete online forms, make purchases, and help execute longer-term goals across connected apps and services. This launch helped drive significant enthusiasm around the AI ecosystem as one of the first large-scale consumer agentic AI products potentially expanding AI monetization beyond advertising and creating new demand for the computing infrastructure required to run millions of autonomous agents. Meta Muse AI agent became the most downloaded product in the Apple App store following its launch and helped propel Meta shares 11% higher in September.
Advanced Micro Devices (AMD) had a significant milestone in September as the company’s market capitalization crossed above $1 trillion on September 21st. A significant catalyst of Advance Micro Devices surge was the release and adoption of the aforementioned Meta Muse Agent. Meta Muse reaching the top spot for US iPhone downloads helped fuel optimism around chip demand to support agentic workloads. AMD management has been promoting that agentic AI workloads have disproportionately higher demand for CPUs compared to GPUs, which was the case for Meta Muse. The success of the Meta AI agent served to bolster and provide further credibility to this thought, sending AMD shares and other semiconductors surging. AMD shares surged 29.96% on the month primarily as a result of this broader AI optimism.
Alphabet also came into focus this month as it was reported on September 8th that the Alphabet-Blackstone cloud venture had hit delays at major data center locations that were slated to run Google chips. The joint venture between Blackstone and Alphabet was launched with $5 billion and aims to rent Google AI processors, or TPUs to customers in 2027. The delays underscored the challenges for mega cap tech regarding the AI infrastructure ambitions.
Source: Bloomberg, L.P., and Nasdaq as of 9/30/2026.
Standardized performance - Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and Shares, when redeemed, may be worth more or less than their original cost. See invesco.com to find the most recent month-end performance numbers. Market returns are based on the midpoint of the bid/ask spread at 4 p.m. ET and do not represent the returns an investor would receive if shares were traded at other times. Fund performance reflects applicable fee waivers, absent which, performance data quoted would have been lower. Returns less than one year are cumulative. Invesco QQQ’s total expense ratio is 0.18%.
For the month of September, shares traded of QQQ decreased by 0.25% and notional value traded increased by 0.72% month-over-month. The month saw an average of 33.12 million shares traded each day (vs. 33.20 million last month) for an average daily value of $23.99 billion (vs. $23.82 billion last month). That compares to averages of 64.71 million shares and $7.85 billion over the life of the fund, and 50.73 million shares and $32.69 billion for the past 12 months.
Important Information
NA6008514
All data is from Bloomberg, L.P. as of 9/30/2026, unless otherwise noted.
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