The U. S. stock market slides into a ‘correction’ for the second time this year.
For the second time this year, stocks have gone into what’s known on Wall Street as a correction — a drop of 10 percent or more from a recent high.
As of Friday’s close, the benchmark S&P 500 index has dropped 298 points, or 10.2 percent, since reaching a record high on Sept. 20. After a furious decline in October, stocks steadied in early November, but the selling picked up again the past two weeks as investors abandoned high-flying technology stocks amid concerns about the U. S.-China trade dispute and global economic growth and bailed on energy stocks as the price of oil plunged.
The Nasdaq, loaded with technology stocks, is already in a correction. The Dow Jones Industrial Average is 9.5 percent below its high set on October 3.
According to research firm CFRA, this is the first time since World War II that the S&P 500 has had two corrections in the same calendar year, though there have been a few times where it experienced corrections within 12 months of each other.
The stock market is still enjoying the longest bull market in history although some of the conditions that sustained it have changed, including an increase in interest rates to more normal levels after the Federal Reserve helped keep that at historical lows for years.
“Corrections are normal, but they haven’t been normal during this period of the Federal Reserve bringing interest rates down to near zero for so many years,” said Quincy Krosby, chief market strategist at Prudential Financial.
Here’s a look at what history shows about past corrections, and what market watchers are expecting going forward.
Q: How bad is this market drop?
A: The latest drop isn’t as breathtaking as the one in February, when the S&P 500 lost 10.2 percent in just nine days. Only 19 times since World War II has the S&P 500 lost at least 10 percent in 10 days or fewer.
Still, the return of volatile trading and the S&P 500’s latest slide into a correction caught many investors by surprise.
