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Last week was relatively quiet until Friday, when the S&P 500 declined sharply by 2.40%. This was the first daily change of greater than 1% in over two months, ending a late summer period of subdued volatility. Implied volatility rose sharply on Friday, as measured by a 40% increase in the VIX to 17.50. Last Friday’s selling was mostly the result of comments from the Fed about rising interest rates. On Monday, stocks rebounded to offset approximately half of Friday’s losses. Today, stocks fell sharply, reversing Monday’s gains following cautious comments on interest rates by Federal Reserve Governor Lael Brainard. Adding fuel to the fire, energy stocks led the decline amid concerns about rising oil supplies after a new report from the International Energy Agency. On the positive side, the Census Bureau reported that U.S. median household income rose a strong 5.2% in 2015 and that the poverty rate fell to an eight-year low.
