The S&P 500 index fell 2.5% this past week, while the Nasdaq Composite declined 2.6%, and the Dow Jones Industrial Average dropped 2.1%. That puts the S&P 500 and Nasdaq in correction territory, with a drop of 10% or more from their highs of the year.
“Sentiment has turned,” says Jay Woods, chief global strategist at Freedom Capital Markets. “Things are starting to show breakdowns. That gives me pause.” And for good reason. The higher rates remain, the more economic and profit growth should slow as tighter policy hits the economy with a delay. That makes investors—and companies—doubt even good news coming from corporate earnings. Meta Platforms warned on its third-quarter earnings call that advertising sales could slow even as its earnings and sales easily topped forecasts, causing the stock to drop 3.7%.