Stocks at a Record, the Fed Leans Toward a Hike

Trend: up again, and at a record. The S&P 500Glossary: An index of 500 large US companies, weighted by how much each is worth. When someone says “the market” without naming anything, this is usually what they mean. gained 2.6% in August to close at 7,686, its highest month-end close and its first monthly gain since May, and is up 12.3% for the year. It set three record closes, the last at 7,799 on August 13. The Nasdaq 100Glossary: An index of the 100 largest non-financial companies listed on the Nasdaq exchange. It leans hard toward technology, so it moves further than the S&P 500 in both directions. rose 4.2%, the Russell 2000Glossary: An index of about 2,000 smaller US companies. Smaller firms borrow at floating rates more often, so this index reacts quickly when interest rates move. 0.9%, developed international stocks (EFA) 1.8% and emerging markets (EEMGlossary: The iShares MSCI Emerging Markets ETF, which holds large and mid-sized companies in developing economies such as Taiwan, China, India, South Korea and Brazil.) 4.6%. Every major index is above its 200-day averageGlossary: The average closing price over a set number of recent days, recalculated every day. It smooths out day-to-day noise to show the underlying trend., and two-thirds of S&P 500 members (66.3% on August 31) are above their own, the same share as at the end of July after a mid-month high of nearly 73%.

VolatilityGlossary: How far and how fast a price swings over a period, whether up or down.: quiet, and quieter underneath. The VIXGlossary: An index built from S&P 500 option prices that estimates how far the index is expected to swing over the next 30 days. Higher means traders are paying up for protection. closed the month at 14.9, down from 16.0, and never closed above 16.5; its highest intraday print was 18.4 on August 5. By the threshold the market has used all year, anything under 20 reads as complacent and above 25 as stressed, and August never came close. Single stocks calmed more than the index: Cboe's constituent volatility index (VIXEQGlossary: The Cboe S&P 500 Constituent Volatility Index: the average expected 30-day swing of the individual stocks in the S&P 500, read from their options prices.) fell from 44.4 to 35.8, and its multiple of the VIX narrowed from 2.8 to 2.4.