Economies around the world are strengthening and corporate profits are on the rise..
"In January, we talked about fear of missing out".
"I don't think the market is focused on fundamentals at all", Anwiti Bahuguna, senior portfolio manager at Columbia Threadneedle Investments in Boston.
"Equities have traded in a roller coaster fashion all week and today is no exception", said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
Discerning the root cause of the correction is almost impossible, but the likely culprit is that investors, for the first time in almost a decade, believe that central banks around the world will pull back on their recession-era easy money policies and raise interest rates to ensure that rapidly growing economies don't run too "hot".
While that was good news for consumers, it stoked fears among investors who are now anxious about a drop in corporate profits and a potential rise in inflation. "The question is whether there's been some serious damage done, either in terms of breaches of key technical trading levels or a change in overall market sentiment", Morrison said.
The technology-laden Nasdaq and the broad Standard & Poor's 500-stock index also drifted lower during the day - and each was down more than 3 percent. Many market watchers have been predicting a pullback, saying stock prices have become too expensive relative to company earnings.
But Coupe said the volatility showed investors were having difficulty deciding between stocks and bonds at the moment. The housing industry is solid and manufacturing is rebounding.
The heavier load of Treasury debt that needs to be issued to fund widening deficits comes as the Federal Reserve has begun gradually reversing government bond purchases it made to aid recovery from the financial crisis.
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"Whilst the recent declines in the USA have attracted the lion's share of attention, the major benchmarks have actually [performed] relatively well compared to several other worldwide indices in recent sessions", said David Cheetham, chief market analyst at the United Kingdom brokerage, XTB. This drop in the market was simply healthy and overdue volatility to reduce excesses. That combination usually carries stocks higher.
The recent turmoil follows a prolonged period of booming stock prices with virtually no sharp declines. If rates rise quickly, that argument becomes much less persuasive. He said the index had created a circular system in financial markets, "moving from being a measure of something to being something that influences this thing it is trying to observe".
"This is going to take longer to work out than people expect", he said. At its height, the Dow around 500 points into positive territory, a thousand points up from its low. Brent crude gave up 70 cents, or 1.1 percent, to $64.81 per barrel. The index dropped by 100.6 points, or 3.8% to 2,581. Oil prices have now lost more than 10 percent of their value from the peak in late January.
The dollar fell to 108.84 yen from 109.42 yen. The euro dipped to $1.2224 from $1.2263.
Additionally, the Bank of England indicated that it was planning to tighten monetary policy earlier than was expected. That also sent the pound higher.
FedEx and UPS dropped about 2 per cent after the Wall Street Journal reported Amazon.com Inc will be launching its own delivery service.
The 10-year Treasury yield, which touched a four-year high of 2.88 percent on Thursday, is trading around 2.84 percent on Friday.
The pan-European Stoxx Europe 600 index declined 1.6 percent.
The Dow is down 528.32 points, or 2.1 percent.