Market watchers remain at odds over what tripped the sell switch. Primarily, the conversation comes down to fundamental vs. technical, and both sides have a reasonable case.
In the days since the correction began — the market's recouped more than half the downside since the low point — a volley of explanations has been bandied around in analyst notes.
"Anytime the stock market falls like it has over the last couple of weeks, investors rush to find the reason for the decline, and usually there are no shortage of opinions as to why the market did whatever it did." Raymond James analyst Andrew Adams said. "This most recent correction has been no exception."
Occam's Razor is a philosophical concept positing that when confronted with a question that has multiple potential answers, use the simplest one. In that vein, Adams offers up a big-picture look:
"In truth, plenty of sellers likely sold for no other reason than others were selling and the market was going down!" he wrote. "The point is that it is often difficult to determine 'the why' when it comes to stock market moves, considering the market is made up of many unique buyers and sellers who have their own motivations, time horizons, and strategies."
Then there's a theory considerably more complicated.
Banking analyst Dick Bove, at the Vertical Group, sees the seeds for the correction as being planted earlier by officials in the Trump administration.
"The market decline began on January 26, 2018. There were two events that precipitated this decline: The first is the comments by Treasury Secretary Mnuchin suggesting that he would let the market set the price of the dollar. The second on January 30, was the State of the Union address," Bove siad.
"These two sets of comments frightened many because they suggested to holders of United States debt that the government would let the value of Treasury holdings fall at the same time as the country would be seeking more money to pay for expansionary plans in infrastructure rebuilding and defense."
Whether simple or complex, the issues led up to market upset not seen since the latter days of the financial crisis.
Source : https://www.cnbc.com/2018/02/16/the-stock-market-correction-two-weeks-later.html