Another way to look at this is:

Wall Street returns to June 30th levels, which were record highs, and which marked a tremendous rebound from the Feb-April 2020 decline due to the pandemic. Those levels, while erasing some gains from the past couple of months, are still higher than the 10-year trend line of a remarkably long-lasting bull market.

Perfect, this gives bulls more hope while simultaneously extending an olive branch of doom to the permabears.

How is 2% even news? Doesn't that happen all the time? I bet it rebounds tomorrow.

Was already below 50 day moving average a few days ago probably more now. Half way to a correction. Seems like we've been up and up and up for so long people are surprised!

Though today's news take is on Evergrand a Chinese company be the cause. Which I believe is one of the biggest holders of loan debt in China. It seems like news reports CCP will not bail them out.

So if you believe the big rally we've had is built on risky credit and 'free' credit extended by governments that will come home to roost, then it could be a scary sign. But from what I've read China is somewhat unique in there small scale individual loaning with historically low compliance & reserves for banks, seems the government is trying to reign that in. Protect their power & what they view as best for their economy in the long run, at expense of short term correction.

https://www.marketwatch.com/story/sp-500-perilously-close-to...

If by "all the time" you mean "every couple of quarters", you might be right:

"The Nasdaq Composite (.IXIC) was down 396.26 points, or 2.63%, at 14,647.71, set for its worst day since May 12."

But by my measurement, no, 2% is a really bad day. The 2% isn't the news anyway, it's the "why" that's the news, and that is left as an exercise for the reader.

I think the 2020 crash is fresh in everyone's memory:

https://en.wikipedia.org/wiki/List_of_largest_daily_changes_...

Date % Change

2020-10-28 −3.53

2020-09-03 −3.5

2020-06-11 −5.89

2020-03-20 −4.34

2020-03-18 −5.18

2020-03-16 −11.98

2020-03-12 −9.51

2020-03-11 −4.89

2020-03-09 −7.60

2020-03-05 −3.39

2020-02-27 −4.42

2020-02-25 −3.03

2020-02-24 −3.35

I consider 2020 to be an outlier of volatility. You might consider otherwise. But if I must make qualifications to my answer to "doesn't it happen all the time?", then it would be "if you consider only 2020, then yes. Otherwise, no, it is not common".

2020 may be an outlier, but it means that we're not really concerned about "small" 2% losses right now.

The big dip from last year came and went. These 2% movements don't even hold a candle to what happened last year.

Maybe if you're a new investor who started investing this year, it'd be scary. But frankly, the stock market has been incredibly scary for 5 years now, at least. Flash crashes, COVID19, VIX going crazy, weird hedge funds disappearing overnight (Archegos Capital), etc. etc.

At no time was the story the "stock market". The story was Archegos capital, or COVID19 spreading around the world, or... whatever.

No, I agree. 2020 was disruptive in so many ways. My concern is what happens when an increasing number of people think that a 2% dip is normal to the point of not being newsworthy.

Ah, I get ya now. Thanks for the clarification. And, yeah, normalizing one-day drops of 2% is a bit of a disturbing thought. :)

All of those have been very good days to buy.

There's that old (apocryphal, I think) chestnut about someone asking JP Morgan what he thought the market would do in the future, and him answering, "It will fluctuate." Back when I was working at a trading firm, it became particularly apparent to me that both bad days and good days were a dime a dozen.

Whether or not that's newsworthy depends, I suppose. In the USA, mass murders seem to be more common than major market corrections, but I wouldn't want to say that they're not newsworthy simply because they happen a lot.

That’s the point - it doesn’t.

Did you forget about all the wall street falls stories from the year 2020?

2% isn't really a story. VIX is under 30 right now. There's nothing crazy going on in terms of volatility yet. Maybe tomorrow things will be bad but... lets not go chasing after scary stories yet.

I think if VIX spikes to 100 (as it has in the past: when crisis start to happen), then we can talk. But for now, its premature to cast any doom or gloom about this situation.

SPY shows a nice weekly gap in the low 400s. I wonder if we work down to that on a wick and then try for new highs again around EOY. VIX is not looking very interesting mid term.

The reason for the this downturn is what's newsworthy. We're potentially witnessing another Lehman Brothers moment.

Then link and/or discuss the newsworthy event, not the market movement.

If you think the Chinese loan company is going to be a problem, feel free to discuss that as the core topic. But looking at the US stock market when the Chinese Bond market is erupting is a bit of a non-sequitur, don't you think?

Given the low value of VIX, the US investors seem rather calm about the event right now. It is news if VIX spikes, as options are bought when investors are scared. But 2% movements and under 30 VIX is rather ordinary, as far as US stock markets go.

the more likely reason is a large fund rolling their puts which causes forced liquidations for highly leveraged market participants. it's been doing this for years and is one of the reasons for consistent turmoil in the market every september (and march - it is a bi-annual event)

Perhaps the bigger story is Evergrande, which is shaping up to be Lehman 2.0 in China. There is a lot of uncertainty about how the CCP will respond, and what the cascading effects will be on the global economy.

Is X a lot is a good question in general. It helps to have some numbers to anchor on - the first whole market circuit breaker is at 7%, or 5% for one security (ticker symbol)

https://www.investopedia.com/terms/c/circuitbreaker.asp

Overreaction to the impending evergrande default tomorrow where they will likely fail to pay interest. The implosion will be mostly contained within China. Sure there will be some margin call around the world, but again, contained in china.

2% single direction days are still outliers in mature markets at the index level.

It happens on or about this time most years it seems. Humans seem incapable of basic pattern recognition when it comes to money.

My guess is this sort of article is designed to cause amateurs to run away, feeding short positions and bringing some stocks down to improve profits on specific purchases.

Sure there are underlying one off events occurring that spark these things but the reactions are typically outsized at specific times of the year

If you're confident that it rebounds tomorrow, you should be buying.

I did buy the dip. But I don't need it to rebound tomorrow.

And it's already rebounded by a percentage point since this story was posted. https://www.google.com/finance/quote/.INX:INDEXSP

A reminder that a 2% drop followed by a 2% rise does not return to the previous tops. Drops while appearing small do have their significant impacts felt for longer than expected.

Not sure what you mean.

It takes a 2.05% rise after a 2% drop to get back to the old level.

A 10% rise following a 10% drop gets you an exact 1% loss which is significant. I suspect that's where the village saying originates.

Yep. I moved my allocation away from bonds and into equities today, a small amount. I don't think this is necessarily the bottom, but the past month has seen a healthy down turn in equities to balance the record growth that preceded it for a year and a half.

It would be crazy to give the bonds vs equities question much later than October-November this year. We've had more than enough sitting around in equities and other assets and way too many technicals are all showing uplift incoming, even if it's temporary. If your trading scope is less than 1Y you are smart to look at equities IMO.

Given the way that inflation looks switching some investments out of bonds is a good idea.

> expected a 10% correction

I love how Wall Street people love to use the word "correction" instead of "crash" to make themselves feel better.

They describe different things. 10% down in a day would be a crash (and a correction). 10% down in a month or two is a correction, without the crash part. There's no formal definition of how fast something has to be to be considered a crash, but 2% ain't it.

Personally I love to always call it a "crash" because it's very in-your-face to hedge funds because they think 2% is a lot of money to them.

While I'm sitting here rejoicing over the black friday sale on some great stock buys.

I think "high speed correction" is technically more accurate than "crash". A "crash" can be caused by very real things. A "correction" is caused by unsanity being cancelled.

A market correction has a specific technical meaning: a fall of 10% from the 52-week high.

Yes, they define this specific meaning so that it makes them feel comforted about it.

"Oh shit I just lost 10 million dollars, but nah it's not a crash, it's just a correction" -hedge fund people on Wall St. in suits working till 2am eating ramen because they can't get off work in time to cook a healthy meal or go to a normal restaurant

When it goes up 2% it never makes the news.

Yep, never happens...

1-1.5% up: https://www.reuters.com/business/futures-rebound-oil-stocks-... <1% up: https://www.reuters.com/business/wall-street-gains-crude-pri... <1% up: https://www.reuters.com/business/wall-street-gains-dovish-fe... <1% up: https://www.ft.com/content/d3cecd49-7dec-487d-a1f0-356ead682... 1-1.5% up: https://www.proactiveinvestors.com/companies/news/938839/us-...

It's like everyone here has missed Evergrande.