Ask Matt: When will the selling stop?
Q: When will the selling stop?
A: Corrections aren't supposed to be fun. But while a 10% market decline from the high can be scary - it's typically fleeting.
Just when investors thought the market's pain was ending, the selling has resumed. About a week after falling into a correction - and staging a healthy rally back - the Standard & Poor's 500 flirted Tuesday with a correction again and was just a fraction of a percentage point away from being down 10% from the highs.
If this correction follows the histroical playbook, there could be more downside to come. There have been 19 other corrections going back to 1946, says Sam Stovall of S&P Capital IQ. On average, these corrections sent stocks down 14% from the highs before finding their footing. If that pattern repeats again, that would mean the market could fall another 5% before finding its footing.
With that said, every correction is different. This one is being sparked as two key factors that have propelled the market - including low U.S. short-term interest rates and strong growth in China - look questionable going forward. Investors don't want to fight the Federal Reserve if rates are headed higher. And many companies that have relied on Asia for growth might need to find another growth engine.
Paste BN markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz.