AI resurgence buoys S&P 500 amid 14% average stock drawdown since August
Source: Bloomberg Television · All Bloomberg Television reports
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Summary
Bloomberg Television interviewed Schwab's Kevin Gordon on the narrow market rally powered by AI and tech stocks after a summer consolidation, contrasting the cap-weighted S&P 500's modest decline with widespread individual stock drawdowns. The segment discussed supply-driven inflation requiring a new Fed framework, recent Fed speakers providing forward guidance on a measured pace of tightening, resilient consumer spending supported by jobs and savings drawdowns, and retailer preparations for holidays amid price hikes and tariffs. Gordon highlighted low layoff activity outside tech and financials, strong earnings beats shifting focus to CapEx, and upward revisions to S&P earnings growth expectations.
Sourcing relied on the guest's analysis, referenced Fed officials (John Williams, Philip Jefferson, Austan Goolsbee), recent economic data releases (jobs report, personal income and outlays), and internal Schwab research. No anonymous sources; graphics were implied for market stats but not detailed in transcript.
Editorial Assessment
The interview accurately captured the market's narrow breadth, with data confirming the S&P 500 near highs while average stocks saw significant pullbacks, and AI/tech resurgence after consolidation. Claims on consumer spending (0.6% real increase in August) and weak September jobs (+29k) hold up well against BEA and BLS releases. Inflation discussion correctly noted supply shocks (oil, diesel up sharply) limiting Fed tools, aligning with Goolsbee's 'no bad weather, just bad clothing' framing. Viewer perception may skew overly optimistic on labor resilience, missing that job gains slowed markedly, revisions were downward, and wage growth lagged inflation at 3%. Framing leans toward corporate and market positivity without deeply exploring risks from tariffs, policy uncertainty cited by Fed officials, or concentration vulnerability if AI CapEx slows. Overall quality is high for a TV segment but lacks balance on downside risks.
Key Moments
Average maximum drawdown for S&P 500 member since beginning of August is 14%, while cap-weighted index is off highs by just 1%
Consistent with multiple 2025-2026 analyses showing narrow market breadth, with S&P near all-time highs in late 2026 while equal-weight and average stocks experienced deeper corrections of 15-20%+ intra-year.
August inflation-adjusted consumer spending rose 0.6% month-over-month, strongest in a couple of years
Confirmed by BEA August 2026 release showing real PCE up 0.6%, the largest monthly gain since early 2025.
Diesel fuel prices saw a 13% jump in September
Data shows only modest monthly increases (~0.1-1%) in September 2025 diesel prices around $3.75/gallon; 13% appears overstated or possibly misstated from a different period or metric.
S&P 500 calendar year earnings estimates revised up from 15% to 35%
Analysts have raised 2025-2026 EPS growth forecasts significantly due to AI, with some reports citing 25-30%+ growth; exact 15-to-35 shift not precisely matched but directionally aligns with upward revisions.
Corporate America has avoided large-scale layoffs; initial and continuing jobless claims remain low outside tech and financials
September 2026 jobs report and prior data show payrolls slowing but no broad layoff wave, with claims low and weakness concentrated in information and finance sectors.
Notable Concerns
- Overstates uniformity of labor market recovery by downplaying sector-specific weakness and recent slowdown in hiring
- Limited discussion of tariff impacts on inflation and consumer costs despite referencing price hikes and retailer hedging
Sources Consulted
- Personal Income and Outlays, August 2026
- Employment Situation Summary - September 2026
- S&P 500 Drawdown History and Current Performance
- S&P 500 Earnings Preview and Growth Estimates
- Speech by Fed Vice Chair Philip Jefferson on Economic Outlook
- Motor Fuel Prices – September 2025
- Equal Weight vs Cap Weight Market Narrowness