S&P 500 Non-AI Stocks Surge 6% in October, Best Month Since 2022
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S&P 500 non-AI stocks gained roughly 6% in October, their best month since the AI trade took off in 2022–2023; the same day, Goldman's US AI basket dropped 4.7%, signaling a leadership rotation from AI into defensive sectors.
AI stocks plunged — did the broader market follow?
Goldman Sachs' US AI stock basket fell 4.7% in a single session. The Nasdaq 100 dropped 3%; Intel hit an intraday record decline.
Yet the equal-weight S&P 500 rose about 1.2% on the same day, diverging sharply from the cap-weighted index.
This means → the selloff was concentrated in mega-cap tech and AI names. Ordinary stocks kept rising. This was a rotation of capital, not a panic exit.
Where did the money go?
Consumer staples led all S&P 500 sectors, up 1.64%. Colgate-Palmolive gained roughly 2.5% and Mondelēz rose about 3% by midday — both beat Bloomberg consensus on earnings.
Discretionary names were also strong: Hilton expects momentum through 2027; Royal Caribbean says 2027 bookings already exceed historical levels at higher prices.
In plain terms = capital shifted from "betting on AI's future" to "companies making money right now." Defensive qualities became a premium.
What is earnings season telling us?
UBS analyst Mark Paski noted that 78% of companies beat consensus EPS in the early phase of Q3 reporting.
But he cautioned that margins remain the key uncertainty for consumer companies.
This means → top-line revenue looks fine for now. The real suspense is on the cost side — if margins compress, the consumer-stock relay may lose steam.
Can this rotation last?
Goldman data show the Nasdaq 100's underperformance versus the equal-weight S&P 500 this month is approaching the widest monthly gap since 2002.
Non-AI stocks posted a roughly 6% monthly gain in October — their best since the AI trade began building in 2022–2023.
This reflects improving market breadth — the share of stocks participating in the rally is widening. The next key test: whether consumer companies with solid fundamentals can truly take the baton as the market's new leading theme.
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