The two best-known stock market indexes, the Dow and the Standard & Poor's 500, have dropped 10 percent from their all-time highs, set January 26.
Wall Street tumbled back into sell-off mode, with the Dow plunging more than 1,000 points as worries over interest rate hikes continued to drag the market down.
From Tuesday's close that would drive the S&P below 2,400 and the Dow to roughly 22,000-a total correction of 17% for both indexes from their all-time highs.
Is this the worst decline ever?
"This is not the end of the world, but it is uncomfortable", said Rich Guerrini, CEO of PNC Investments. But on Wall Street, it raises fears that inflation will finally pick up, and that the Federal Reserve will have to raise interest rates faster to fight it. Equities for years have looked relatively attractive compared to the low yields offered by bonds, but the rise in Treasury yields has diminished the allure of stocks, especially with stock valuations at historically expensive levels.
Despite these large drops, the stock markets have been rising for about nine years now, and many analysts say it's time to hit the pause button.
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He said indications of "inflation risk on the horizon" - including higher-than-expected jobs and wage growth last week amid higher labor costs in manufacturing and non-manufacturing - was fueling the market's nose dive. The Nasdaq ended at a two-month low and just shy of a correction.
Equity options trading volume, already elevated this week, is likely to pick up as February contracts approach expiration next week, said Jon Cherry, head of USA options at Northern Trust Capital Markets in Chicago. Investors have now had a taste of fear of loss, which hasn't happened in a long time.
Trading volume of more than 12.3 billion shares marked the busiest trading day since just after the November 2016 election, and topped Monday's volume of 11.7 billion.
"We haven't seen the Dow [or] the S&P touch the 200-day moving average on a cash market basis", he told me Tuesday. "It can take two to three weeks to work through the system".
"I do think it's premature and I did see some very low-quality stocks lead the move up", he said.
"We had an epic run".
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Tesla burned through $3.4 billion a year ago . (That will make the range from Model S, 3, X and Y). "It's just a matter of time". Refreshingly, on Tesla's Q4 earnings call Wednesday, CEO Elon Musk was contrite, and transparent about the cause of the delay.
President Trump, who has been keen on taking credit for stock market booms since taking office, has stayed conspicuously mum on the recent downswing. Now the Fed is raising rates, and they're going to raise them potentially quicker than people expected.
Washington is putting more pressure on rates.
On Wednesday, the US Senate reached a two-year bipartisan budget deal worth around United States dollars 300 billion in an attempt to end the kind of squabbling over fiscal issues that has plagued Washington for years. He said investors are now selling because they are afraid of bigger losses if they stand pat. Its steep dive in the final minutes of trading put the Dow in correction territory. To drum up demand for that higher supply, rates may have to go up.
"You need to flush it out and give the markets a chance to reset".
Here are the 10 biggest one-day point drops in the Dow's history.
"As quickly as the market fell, it recovered much of the ground it had lost as investors remembered the economy and corporate earnings remain strong", he added.
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