There was a rare stock rout on Oct 10, the S&P 500 Index tumbled to its lowest since July and the benchmark 10-year Treasury note yields reached their highest since 2011.
I make a excerpt of the relevant and valuable news and organize them into clear and logical form. Note all the sources are directly collected from Bloomberg and Marketwatch's free online news and do not fully represent my own perspective, yet they accord with my own a priori market sense. Hope it could invoke some insights behind this perplexing omen.
Plunge Explannation
There are several direct reasonable 'hindsight' attributions (listed below), though the radical casuality is still uncertain like a random walk:
Monetary: Fed’s tightening of monetary policy
Fed is raising interest rates to curb financial risk-taking
"A very-low interest-rate environment for a long time does, at least in some dimension, probably add to financial risks, or risk-taking, reach for yield, things like that. Normalization of the monetary policy, I think, has the added benefit of reducing somewhat, on the margin, some of the risk of imbalances in financial markets." - Federal Reserve Bank of New York President John William
Fundamentals: Overvalued Stock Valuations
Trade War worry again
The U.S. dollar is too strong. Tariffs are crushing an already weakened China, which hurts all of its emerging-market suppliers.
Global Impact
China's market suffers, with a sinister sign of recession
China’s benchmark equity gauge closed 5.2 percent lower, the biggest loss since February 2016, as a global sell-off spread. More than 1,000 stocks fell by the daily limit, or more than one in four.
The Shanghai Composite Index ended below 2,600, a level not even breached during market crashes in 2015 and 2016.
HongKong's Hang Seng Index dropping 3.5 percent , the biggest in eight months. Tencent Holdings Ltd., the most valuable stock listed in Asia, slid 6.8 percent to extend a record losing streak to a 10th day.
- US stock sell-off spreads through Asia
Future Outlook
Short-term, not bottomed yet
As Treasury yields surged to a seven-year high, trade tensions flared up again with China and a growing number of companies blamed margin pressure for profit shortfalls, it’s likely to take some time for the market to find the bottom.
Long-run, not prominent bearish trend
The economy and profits are still strong, although the weak points are also well-known.