Industrial Stocks Sink Nearly 10% From August Peak, Break Key Technical Support

The S&P 500 Industrials Index has dropped nearly 10% from the record high it set on Aug. 14, and it just broke below a key momentum indicator for the first time since President Trump's tariff-driven selloff in early 2025, according to Bloomberg.

The damage built gradually. By Sept. 8, the index was down 6.1% from its peak, having already sliced through its 50-day and 100-day moving averages, according to Bloomberg and Yahoo Finance. Brian Mulberry, chief market strategist at Zacks Investment Management, told Bloomberg the 200-day average, sitting about 2.5% below the trading level at the time, was the next test. Two weeks later, that level appears to have given way.

The names getting hit tell the story. GE Vernova and Eaton have each fallen at least 9% since mid-August, according to Crypto Briefing. Caterpillar, a longtime bellwether for global industrial activity, is down roughly 5%. GE Aerospace and RTX have also come under pressure. Honeywell is the worst of the group by far, down 47.1% year-to-date, per Crypto Briefing.

Weak Factory Data, Rising Oil

August manufacturing output fell 0.3%, the first monthly decline since October 2025 and a sharp miss against Wall Street's forecast for a 0.3% gain, according to Crypto Briefing. That snapped a seven-month streak of growth.

Oil prices have climbed more than 10% since mid-August as shipping through the Strait of Hormuz remains disrupted amid the Iran conflict, according to Bloomberg and Crypto Briefing. That's a direct hit to fuel-sensitive names like GE Aerospace and RTX, whose jet-engine and defense businesses face tighter margins when crude spikes.

Meanwhile the sector isn't cheap. Industrials trade at 23.7 times estimated earnings for the next 12 months, versus 19.4 times for the broader S&P 500, according to Bloomberg. "It's a recipe for a pullback," Brian Sponheimer, a portfolio manager at Gabelli Funds, told Bloomberg. "If you're a trader, it makes the path of least resistance pressing the sell button."

Bank of America flagged "capitulation" among its clients, who dumped industrial shares at a pace never seen in data going back to 2008, Bloomberg reported. Extreme selling like that has historically marked the tail end of a decline, not the start of a bigger one, and the index was still up 13% for 2026 as of Sept. 8. Whether that holds after the additional slide since then is the open question.

It's Not Just Industrials

The technical damage is showing up elsewhere too. BTIG's chief market technician, Jonathan Krinsky, warned in a note titled "Super-ficial Rally" that current market signals echo the peak of the 2000 dot-com bubble, according to BigGo Finance. The Philadelphia Semiconductor Index is down roughly 14% from its June high, with its 30 constituents averaging a 26% drawdown. Ten of those stocks, including GlobalFoundries, KLA and onsemi, are down more than 30%, with only AMD, Nvidia and TSMC outperforming the index. The KBW Bank Index has fallen more than 10% from its peak, a divergence from the broader market Krinsky says hasn't shown up since January 2000.

The AI trade has been part of the drag. Anthropic CEO Dario Amodei called for a deliberate global slowdown in AI development over the weekend, citing safety risks including AI agents potentially compromising the internet within six to 12 months, according to reporting carried by KSAT 12. Elon Musk said he agreed. OpenAI's Sam Altman told Fortune the company would likely delay its stock sale until next year, and SoftBank Group fell 10.7% in Tokyo on the news. Nvidia sank 3.4% that session. President Trump dismissed the need for a slowdown, saying on social media that the only guardrail AI needs is "a STRONG AND SMART (High IQ!) PRESIDENT," and that the U.S. needs to keep its edge over China.

On Wednesday, Sept. 23, the Dow closed down 0.68% at 51,511.59, the Nasdaq fell 1.13% to 26,936.04, and the S&P 500 lost 0.75% to 7,706.03, according to Trading Key, as the 10-year Treasury yield hit its highest level since July 2007 and oil rebounded. Software stocks bucked the trend, with Palo Alto Networks up 5% and CrowdStrike up nearly 5%.

That same day, SpaceX fell 4.11% after regulatory filings showed company President Gwynne Shotwell plans to sell more than $52 million in stock, Trading Key reported. A separate financial disclosure showed an investment account held in President Trump's name engaged in short-term trading of SpaceX stock in July. No investigation has been announced, and the disclosure itself does not establish wrongdoing.

Separately, the Fed's Kevin Warsh raised interest rates last week for the first time since 2023, according to The Motley Fool, while the cyclically adjusted CAPE ratio has climbed above 41, closing in on the roughly 44 level seen near the dot-com peak. The OECD has raised its global inflation forecast and flagged the possibility of another Fed hike later this year, Trading Key reported, even as the U.S. Composite PMI hit a five-year high in September.

The next test for industrials is whether the break below the 200-day average triggers automatic selling from trend-following funds, a dynamic Crypto Briefing flagged as the likely accelerant if support fails to hold. Whether that happens or whether the sector stabilizes the way Bank of America's capitulation signal suggests it might, will play out over the coming sessions.