How major USA stock indexes fared Friday

Trader Fred DeMarco center and specialist Anthony Rinaldi right work on the floor of the New York Stock Exchange Thursday Feb. 8 2018. U.S. stocks are lower Thursday morning as losses from the previous day continue

Trader Fred DeMarco center and specialist Anthony Rinaldi right work on the floor of the New York Stock Exchange Thursday Feb. 8 2018. U.S. stocks are lower Thursday morning as losses from the previous day continue

On my first day on the trading floor of the Chicago Board Options Exchange, I quickly learned one simple fact - markets are created to react, and negative reactions are simply a part of that fact.

When a stock index declines 10 percent or more from its recent high, that's considered a market correction.

The Dow Jones Industrial Average, which suffered a 1000-point drop Thursday, closed higher by 330 points, or 1.4 percent, at 24,190.

In Tokyo the Nikkei 225 index rose 1.1 percent.

The Dow Jones Industrial Average tumbled 4.15% to 23,860, notching its second-worst point drop in history.

The Nasdaq declined 366.45 points, or 5.1 percent. South Korea's Kospi gained 0.5 percent and the Hang Seng of Hong Kong rose 0.4 percent.

"Volatility is here is to continue for a few days perhaps a few weeks longer", said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.

The recent turmoil follows a prolonged period of booming stock prices with virtually no sharp declines. A correction is healthy, unless it leads to a deeper downturn.

The Standard & Poor's 500 index, the benchmark for many index funds, also wavered between gains and losses.

The turbulence spread to Asian markets overnight with several benchmarks down across the region, wiping out most gains made from the previous two days. Many market watchers have been predicting a pullback, saying stock prices have become too expensive relative to company earnings. To get there on Thursday, the S&P would have to fall to 2,333.

There have only been four 10 per cent stock market corrections since the recession ended in 2009 and experts say a correction may be a long overdue breather from the raging bull market which the markets have now been experiencing.

MARKETS: The S&P 500 fell 22 points, or 0.9%, to 2,558 as of 1:53 p.m.

"The primary culprit was higher-than-expected wage growth in the January jobs report, which may have increased fears that the Federal Reserve would be more aggressive with interest rate hikes in 2018", according to LPL.

"This is going to take longer to work out than people expect", he said. That makes the current downswing an official Dow correction, and many investors responded by showing signs of panic, selling off stocks at any cost. The additional borrowing creates more supply in the bond market, forcing the Treasury to increase the yield to lure buyers.

The big sell-offs around the world this week have been pinned partly on concerns over the prospect of higher interest rates. Now those valuations need to be reset, he said.

"I guess a crash is a bear market on speed", is how Letts defined it.

US fund investors sucked $23.9 billion out of the stock market in the latest week, marking the largest withdrawals from those funds on record, but bulls were still encouraged by strength in the global economy and solid USA corporate earnings.

"I'm not overly concerned about the market volatility", Treasury Secretary Steven T. Mnuchin told a House committee on Tuesday.

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