While unwelcome, todays reversal is not without precedent on two counts. Given that yesterdays advances were near record proportions, a correction followed, possibly because prices overshot expectations.
There are just six trading days, since January2000, on which the S&P500 surpassed its 4.2 percent gain. Six divided by 2,062 the trading days in this century- comes to merely a third of one percent.
And while the DJIA advance of 3.5 percent is smaller, and occurred some 12 times since 2000, this represents less than one percent of all closes.
It is true that the NASDAQ experienced 37 closing in excess of 4.2 percent, but this is no more frequent than twice every 100 days.
Yesterdays cut in the fed funds rate is the other factor bearing on the decline. Often the day after brings a reversal, as last November, when the indices lost about 2.5 percent.
As for the second day after such cuts, the chances are about the same for an advance as for a decline: since 2000, the averages gained eight times but declined nine.
DJIA -2.36 percent
NASDAQ -2.57 percent
S&P500 -2.43 percent