After experiencing an unprecedented stock market crash on August 5th, it has stabilized. What will happen next?

Wall Street started off the week slow. Fortunately, the stock market panic just seven days ago did not last long.

Major stock indexes closed mixed on Monday, with the Dow down more than 140 points or 0.4%, while the S&P 500 index closed flat and the Nasdaq index rose 0.2% after soaring in early trading.

So what does all of this mean? The feeling of panic is disappearing, or at least not as obvious anymore.

The Cboe Volatility Index (Cboe VIX), or the so-called "fear index" of the stock market, rose by about 4% to around 21. The VIX index had fallen earlier in Monday's trading, dropping below 20, before rebounding. However, the current VIX index is much closer to the median level seen in most of the summer, and far from the level of over 65 points reached last week during the panic.

"Market corrections are inevitable, and investors often forget this during periods of low volatility," LPL Financial strategists Adam Turnquist and George Smith wrote in a report on Monday. "When they occur, they tend to be painful and raise fears of something breaking."

Turnquist and Smith added that the VIX index's rapid decline was "a constructive signal," as the index's big spike often overlaps with the "inflection point of the stock market."

This may be the case. But it does not answer the question that investors urgently want answered: What will the Federal Reserve do next?

The Fed kept interest rates unchanged at its July 31 meeting, a move that appeared reasonable at the time. Just a few days later, weak manufacturing and job reports, as well as large-scale unwinding of yen carry trades, led to a stock market crash.

"The yen's weakness and Japan's low interest rates have allowed people to borrow cheaply and buy riskier assets. The market has created a bubble, so investors don't need to see too much broader correction," said Nicholas Brooks, head of economic and investment research at ICG Economics, to Barron's.

But such volatility has led some to call for an emergency Fed meeting to lower interest rates. Brooks attributed these calls to "baseless concerns" about an impending economic recession.

Chief economist of TruStage, Steve Rick, told Barron's that the Fed is likely to stick to its stance because it has indeed been watching stocks and bonds.

An emergency meeting may be seen as a panic move. The Fed will be cautious. "The Fed will act cautiously and not want to cause more panic in the market than in the past week," Rick said.

However, the calm mindset has prevailed in the past few days and the market is now back to expecting the Fed to begin easing policies in September.

Taylor Krystkowiak, investment strategist of Themes ETFs, said, "As the sky is falling, the Fed has gained confidence in starting to cut interest rates."

But whether the central bank will cut interest rates by four or half a point is still unknown.

Krystkowiak told Barron's that a rate cut could boost certain assets, especially gold and gold mining stocks. However, banks and companies in various industries with abundant cash flow and healthy balance sheets will also benefit.

The strategist added that investors may also finally realize how dangerous it is to invest solely in the AI theme. Only a few super large cap stocks, the "seven giants," have produced most of the returns.

"More trades have been washed away. The entire market is being led around by a few stocks," he said.

Will market breadth improve? The answer should be yes. The latest inflation data released on Wednesday, as well as financial reports this week from major retailers such as Walmart and Home Depot, will help answer this question.

If inflation continues to cool while Americans continue to consume, this will be a hopeful sign. The performance of the US stock market in the coming days and weeks is also worth watching.

If the other 493 stocks in the S&P 500 index, as well as small-cap stocks in the Russell 2000, S&P 600, and S&P 400 indices, can resume their upward trend as they did in June and July, this will be good news for the bulls.