Volatility Watch: The 2 Events That Matter This Week
U.S. stocks opened lower this morning, with the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average down 0.31% and 0.26%, respectively, at 10:15 a.m. EDT.
Perhaps investors have been spooked by the Japanese market. Stock market losses have been as consistent as the sunrise lately in the Far Eastern country, where the Nikkei 225 fell for the fourth straight today. These are not small losses, either: After a 3% drop on Friday, the Nikkei 225 suffered another 3.3% loss on Monday. The cumulative loss since last Tuesday stands at 6.7%.
Last Friday, the CBOE Volatility Index, or VIX , closed at 12.72, its lowest level since May 17 and well below its long-term historical average, which is above 20. At first glance, that looks entirely defensible. After all, the VIX, which is calculated from S&P 500 option prices, reflects investor expectations for stock market volatility over the coming 30 days. That period now essentially coincides with the month of August -- traditionally, the doldrums for the stock market as traders and investors exchange their trading desks for a lounge chair.
Still, impatient traders who wish to get a head start on their August vacation would be well advised not to skip this week. Consider the two macro-related events on this week's calendar.
Tomorrow sees the start of the Federal Open Market Committee's July meeting. The June meeting of the Fed's rate-setting body caused a bit of an upset, as global markets were roiled by the notion that the Fed may starting pulling back on its monthly bond purchases later this year.
Investors shouldn't expect any change in policy direction (or even any significant change in the Fed's language) from this week's meeting. However, the plan to taper QE is dependent on the state of the economic recovery, so it will be interesting to see whether and how the Fed's statement acknowledges the most recent economic data. Furthermore, the statement is all we'll get, as this week's meeting doesn't include a press conference -- tea-leaf readers will be in high demand (or in heavy supply, at any rate).
Then there's a piece of data coming soon that the FOMC won't be able to use in producing its statement: this Friday's release of July employment report, from the Bureau of Labor Statistics.
As you can see, traders have good reason to be on edge this week. For long-term investors, however, this week is a single footstep on the journey toward reaping long-term returns. Furthermore, one way to dampen volatility is through dividends. With those principles in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of the only nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.
The article Volatility Watch: The 2 Events That Matter This Week originally appeared on Fool.com.Fool contributor Alex Dumortier, CFA has no position in any stocks mentioned; you can follow him on LinkedIn. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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