Stock Market: Slide Hits Correction Level
By definition a correction is a 10 percent drop in stocks from their peak. Since Jan. 26, the S.&P. 500 has fallen 10.16 percent. Closing down 292 points today marks the first correction since the February 2016 and the tenth in the last twenty years. The Dow came in at over 1000 points down.
While sometimes these are just stand alone events, sometimes they continue into a deeper hole as a bear market takes place which is technically a 20% drop from the previous high.
The last bear followed the dot-com bust. From the top of the market in March 2000 until the bottom in October 2002, the S.&P. 500 lost 49 percent.
With bond prices on the rise and rumors of the Fed raising interest rates looking more and more likely every day this correction turning into a bear is a real possibility.
But this is not a problem unique to the United States as Tokyo, Hong Kong, Shanghai and Taiwan all traded more than 2 percent lower in their major stock markets. The entire world economy is on shaky ground.
This turbulence will most likely stick around for most of 2018, if not longer, as global uncertinty looms large.
Many of the underlying issues such as the ever growing national debt as well as the growing fear of inflation are not problems that can be resolved in simple or quick ways.
That is even assuming the current government ever turns their focus on such issues.