Fear of volatile September for stocks fades
"The bond market got ahead of itself and expected a big exit by the Fed and frankly that hasn't happened and it's unlikely it's going to happen," White said.
There are other signs of a calmer bond market. Verizon Communications sold $49 billion in bonds Wednesday, the biggest bond sale ever by a corporation. Demand was robust as bond investors placed more than $100 billion in orders for Verizon's offering. On the same day, the Treasury Department auctioned off $21 billion in fresh 10-year notes, which was also met with strong demand.
"The fact that the market was able to absorb that much supply is very important," said Eric Wiegand, senior portfolio manager for the U.S. Bank's private client reserve.
The amount of money in the U.S. bond market is around $38 trillion, roughly double the size of the U.S. stock market. So when things calm down in the bond market, it affects stocks.
Investors are looking ahead to slow but steady growth in corporate earnings, as third-quarter earnings season starts up in October.
LPL's White pointed to stronger-than-expected manufacturing and service industry reports from the Institute for Supply Management last week as another reason why stocks have performed so well.
"Nothing predicts how corporate earnings will do better than the ISM reports," he said.