Long Term Perspective
Yearly changes in the S&P 500 paralleled the growth in the Russell 2000 between 1995 and mid-1998. The Russell 2000 followed its own path after the Russian financial crises and the near collapse of the Long Term Credit Hedge Fund. At the end of 1999, small-cap tech stocks soared and helped propel the index. Momentum was decidedly downward through 2000 until the end of 2002. It wasn't until the second half of 2003 that both the S&P 500 and the Russell 2000 soared versus year ago levels. The Russell 2000 outperformed the S&P 500 in 2004 and 2005.

Short Term Perspective
Stock prices rose in August. Nevertheless, investors are still worried that the Fed will raise rates further, but they are also worried that inflation won't be contained.