When something seems too good to be true, it usually is—and that’s true for market rallies following corrections.
The S&P 500 slumped 1.3%, to 2744.28, while the Dow Jones Industrial Average dropped 299.24 points, or 1.2%, to 25,410.03. The Nasdaq Composite fell 1.2%, to 7330.35.
All three indexes suffered their largest drop since Feb. 8, the day the Dow and S&P 500 officially entered correction territory. The S&P 500 had gained 7.7% since then, despite predictions from the likes of yours truly that corrections don’t end that easily. That doesn’t mean that we’re headed for a bear market, but don’t be surprised if things get a little volatile here.
Of course, today’s selloff will be blamed on Federal Reserve Chief Jerome Powell’s testimony before Congress. As my colleague Randall Forsyth noted, “Powell also pointed out that, since the December meeting, incoming data on the economy and the labor market have been strong, inflation is approaching the Fed’s 2% target, economies around the globe have been strengthening, and fiscal policy has been an added positive for growth.”