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A falling Euro coupled with the European debt crisis led to a fall in the US market as well yesterday. All the major indices i.e. Dow, Nasdaq and S&P 500 were down 2%.
There was a drop of 280 points in the Dow Jones Industrial Average which is 2.7%.
Likewise Nasdaq fell 78 points and the S&P 500 fell by 356 points. The market recovered some losses after it went through further losses.
The CBOE Volatility index spiked 25% to a 14 month high of 44.25.
"With the jobless data and weakness out of the European markets, stocks are down again," said Steven Goldman, market strategist at Weeden & Co.
"There's a heightened sense of nervousness and markets look to be testing the lows of two weeks ago, when we had the mini-crash," he said.
The Dow had lost nearly 1000 points on May 6 but went on to recover 348 points.
The Dow, S&P500 and Nasdaq fell to less than 10% off the rally highs during the 6th May session. Currently, the Nasdaq is already close to that level.
It has been opined by Goldman that if the stocks reach that level then the selling pressure should ease off.
Beyond the reaction to the immediate headlines, the stock market may have already been vulnerable to selling, said Brett Hammond, chief investment strategist at TIAA-CREF.
"The European debt issues and the euro are very important," said , said Brett Hammond, chief investment strategist at TIAA-CREF.
"But the market was already poised for a pullback after the enormous run up in the stock market since March of 2009."
He said that the historic rally happened on the basis of the belief and anticipation that the economic and corporate recovery would take place and that the consumer would carry forward the growth fueled by anticipation that an economic and corporate profit.
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