After a sad September for optimists, the bullish patina of the stock market continued to weaken at the beginning of October, with at least one major benchmark and a number of sectors dangerously close to a correction.
In fact, the Nasdaq Composite Index is COMP,
which fell 2.4% on Monday, according to social media company Facebook Inc. FB,
tumbled over 5% during the session, bringing the tech-laden index about 7.5% up from its record high of Sept. 7, according to Dow Jones Market Data.
Market technicians typically define a correction as a decrease of at least 10% but no more than 20% from a recent high. A market is considered a bear market if it has declined by at least 20% from its peak.
The Nasdaq Composite must close below 13,836.90 to hit the correction area, according to Dow Jones Market Data. The index last entered a correction on March 8, 2021 and left the correction on April 9, 2021.
Amazon.com Inc., a portion of popular “FAANG” stocks including Facebook, Netflix NFLX,
and google mother alphabet goog,
down 14.5% from its closing high on July 8th. Apple stock is down more than 11% from its most recent high, and class A stock from Google GoogL,
were 8.4% lower than a recent high early last month.
Here are the other levels to look out for if the market continues to decline, which is known in October. The S&P 500 SPX,
and Dow Jones Industrial Average DJIA,
were about halfway to correction:
The market has come under increasing pressure, with developments centered on Washington, DC, where tense debt ceiling negotiations are ongoing and infrastructure and social spending negotiations have failed to find a solution.
Investors were also concerned about potentially out of control inflation and the likely response by the Federal Reserve to an overheated economy with CL.1 crude oil,
and natural gas prices NG00,
recently risen to multi-year highs.