Trying to make sense of yesterday’s market plunge, a harrowing 513 drop in the Dow, requires a similar jigsaw-type stamina. Investors are facing a global mix of misery that includes:
It’s hard to gauge whether this is just a “market correction” (see below), and a short-term setback on the way to recovery—or the start of a double-dip recession.
Meanwhile, the Labor Department report released this morning offered a whiff of optimism: jobs were up, slightly; unemployment figures ticked down. And corporate earnings seem strong. Getting the pieces of this puzzle to form a clear picture is going to take some time.
Stand corrected: What are your thoughts about where the economy is headed, here and abroad?
There’s no official definition of a correction. It often refers to when an index falls 10% or more in a relatively short period of time. (Yesterday the Dow dropped about 4%; its now more than 10% off from its May high.) Corrections are nerve-wracking, but not uncommon, and often temporary. From 1900 – 2010, a 10% decline in the Dow happened about once a year, according to Capital Research and Management.