There is a 'sell everything' mentality today. All markets, including gold and oil are experiencing sharp declines. We call this a 'risk off' scenario. There are a number of reasons for the selloff. Some profit reports and revenue warnings have investors very nervous about individual company prospects. There has also been some negative economic data in Europe, which is experiencing a sharp selloff, and in the US as well. In the US the Chicago PMI plummeted well below analyst expectations. Although still slightly in an expansion mode there was a significant drop in economic output growth in that region. Consumer confidence readings are down also. But I think the Fed is the primary negative driver today. It is not that the Fed said or did anything bad, but the realization that economic stimulus has a very limited future, and that the Fed will start increasing interest rates in the not too distant future. The deep complacency of investors is very troubling. The trading pattern on negative days has been that the markets recover as the day progresses. It is important to know that it is not always the case and investors could be in for a shock if today's negative market accelerates downward.
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