NASDAQ is down by about 15% from its highs of less than a month ago, as is the Russell 2000. The S&P is off by a bit more than 10%.
Most often, in my experience, the trigger for a downturn like this is some specific event. The cause, however, is typically that stocks are unusually expensive, given the consensus view about interest rates and profit prospects. In the plain vanilla case like this, what stops the decline is investor perception that the market has dropped enough that valuations are no longer stretched.
In the current downturn, however, it may well be that the cause is not overvaluation, although this was a central issue a while ago, but rather the policy statements and actions of the administration. For example, the Biden efforts to reestablish the US as a center for semiconductor manufacture are being dismantled, while a high official is saying that it’s a goal to return t-shirt manufacturing from Bangladesh to the US. As a family descended from longshoremen and garment workers, I’m not sure any of us think of these as laudable goals. As one of my uncles would have put it, we struggled our whole lives to get out of that situation.
More later.