As the summer winds down, the stock market has managed to slip through August with its uptrend intact — but the quiet surface may be hiding a more volatile undercurrent, according to CNBC’s Mike Santoli.
The S&P 500 sits within half a percent of where it closed three weeks ago, and has stayed within 2% of its record high just above 7800. Pullbacks have halted a handful of points above the former multi-month range top. Trading volumes have been slim, and index ranges narrow.
Nvidia’s strong results and bold guidance sparked a brief relief rally, but the stock ended the week up just 1.3%, back to levels from three months earlier. Semiconductors as a group held their post-July rebound path, doing just enough to avoid unsettling portfolio managers still on vacation.
Santoli argues that the reason to be alert now isn’t simply the calendar turning to September — historically the worst month for stocks — but that several key market metrics are coiling near consequential thresholds.
VIX below 15, Treasury yields above 4.7%
The CBOE S&P 500 Volatility Index (VIX) has slipped below 15, reflecting the placid range. But Santoli warns that much below 15 moves from ‘comfortable stability’ toward ‘eerie complacency.’ Historically, volatility is biased higher at this time of year.
The 10-year Treasury yield has nudged back above 4.7%, partly in reaction to Federal Reserve Chairman Kevin Warsh’s Jackson Hole speech on Friday. Warsh indicated that short-term rates are the tool to address stubborn inflation and that a move might be needed soon. Market-implied odds for a September hike stood just above 50% after the speech.
Santoli notes that there is no known tripwire level where bond yields kneecap equities, but bursts of fixed-income volatility tend to do more damage than a steady ratcheting higher. A near-coin-flip Fed decision less than three weeks out can hold risk appetites in check.
A 10-year yield just under 5% is not misaligned with the present 5-6% nominal-growth economy, he says, but it feels more intrusive to the current investing generation — unlike the late-1990s, when 5-6% yields were experienced as low after a decade-long secular bull market in Treasuries.
Other risk gauges flashing
Broad commodity indexes are rising toward five-year highs, corporate-debt spreads are remarkably tight, and a quirky risk-appetite gauge — the relative performance of lower-quality Citi vs. defensive JPMorgan — has retreated back toward its early-2026 breakout level. That ratio peaked just before the SpaceX IPO in June, when exuberance over Wall Street’s AI-dealmaking role was palpable.
As September begins the year’s final act, analysts and investors start calibrating their views of next year. A key question: How will stocks metabolize an inevitable deceleration in earnings growth from this year’s pace? Charles Schwab noted that Nvidia and Micron together are providing one-third of aggregate 2026 earnings growth, and the top ten earners account for two-thirds. While the median company has returned to profit growth, the equal-weighted S&P 500 has already gained 15% — which may account for much of that.
John Kolovos of Macro Risk Advisors says sentiment leans overly bullish, with survey data like Investors Intelligence showing too many bulls, while real-time market metrics show a relatively high degree of complacency.
Santoli also touches on prediction markets and ‘perpetual futures’ on upstart exchanges, drawing parallels to 18th-century Lloyd’s gambling and early 20th-century bucket shops, which were banned by Depression-era securities laws. He cites a Wall Street Journal piece by Jason Zweig on these echoes.
Finally, he notes that Nvidia’s analyst consensus price target implies 50% upside and a $7.5 trillion market value, even as the stock trades below 20-times next-12-months earnings and below 15 on next fiscal year’s projection — and is easily the cheapest mega-cap on a free-cash-flow basis.
Source: www.cnbc.com — https://www.cnbc.com/2026/08/31/santoli-why-investors-should-be-on-high-alert-heading-into-september.html
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