The Dow Jones Industrial Average was down as much as 460 points in trading Wednesday, "as investor fears of a global economic slowdown intensified after several weeks of turbulent market action," says The Associated Press.
And the correction may be about markets adjusting to more realistically reflect economic reality, says The New York Times.
Things have improved, but maybe not enough to justify stock prices that are quite so high relative to corporate earnings, the paper says.
“Due to excessive confidence in central banks, investors eagerly decoupled high market valuations from what was warranted by the sluggish fundamentals,” says Mohamed El-Erian, chief economic adviser of Allianz, the financial services company.
That disconnect, he says, has been undermined over the last few weeks by signs that the global economy’s fundamentals are weaker than they seemed and concern that the European Central Bank won't adequately fight the continent’s economic drift.
And amid all the fears of threats from the Islamic State and Ebola — and now to our 401(k)s — it's worth mentioning this bit of common sense:
"Many market watchers say occasional corrections are a healthy phenomenon over the long term and give investors an opportunity to add to their holdings at a lower cost," says AP.
"That's why it' so important to stay invested at a time like this, rather than think it's a time to get out," says Kate Warne, an investment strategist at Edward Jones.