Well it is now official, or as official as it can be considering “correction” is a generic term. However, a drop of 10% is widely considered to be a “correction”, and that is the threshold we just crossed after yesterday’s huge losses. Stocks dropped deeply again yesterday, with the Dow falling over 1,000 points, or over 4%, and the S&P 500 nearly that far. Markets fell after positive unemployment claims data fueled fears that the economy is too good, which would lead to a tightening Fed and bring about a recession.
FINSUM: It is quite odd that the markets are afraid the economy is too good. We recognize how a hot economy brings about issues, but we just don’t think we are there yet.