The Dow Jones industrial average plunged 2.54 percent - closing down 666 points - Friday and suffering its worst week in two years as concerns over rising interest rates and inflation from an overheated economy caused a long-feared sell-off.
It was the worst day for stocks since President Donald Trump took office. The retreat was a reversal from the bullish sentiment that has defined the markets for most of the past year. The stock market has been on a historic nine-year bull run.
While the point swing was eye-popping, in terms of the percent of the loss in a market that saw the Dow crash downward through 26,000, the decline did not appear to alarm many investors.
None of the indexes were close to 5 percent Friday, which is considered by some to be the start of a correction. But all three major indexes went negative, the tech-heavy Nasdaq falling 1.96 percent to its lowest level in two week. The Standard and Poor's 500-stock index finished down 2.12 percent.
The yield on the key 10-year Treasury spooked markets by reaching new highs at 2.84 percent. The 3 percent yield is looked at as a key threshold that can drive investors out of equities and into bonds.
"The pullback has everything to do with the 10 year Treasury moving higher, breaching that 2.8 percent level," said Wayne Wicker, chief investment officer at ICMA Retirement Corporation. "Investors are concerned that it moves the trajectory of Fed rate hikes maybe to four rather than three this year."
Those concerns were fueled by Friday reports on increasing wages and tightening labor markets, reflecting of a muscular economy that could veer out of control. The Commerce Department reported Friday that factory orders rose 6 percent last year, the measure's best percentage increase since 2011.
The U.S. and world economies are so strong that people think the good times cannot last. Wall Street watchers are worried that the Federal Reserve under new chairman Jay Powell may overreact and boost rates, bringing the market run to a hard halt and slowing the U.S. economy.
"Rates are rising today specifically on the very good jobs numbers for January, and more importantly you have seen wage growth pop up to 2.9 percent year over year, which is a notable acceleration," said Jeffrey Schulze, an investment strategist at ClearBridge Investments.
"It means you are going to see an inflation picture continuing to firm and strenghten over the course of 2018, which will drive 10-year Treasury yields higher and cause the Fed to reconsider its gradual pace of tightening," Schulze said.
Friday's retreat came two days after the market finished a powerhouse January, closing its best month in almost two years. The Dow finished up 5.8 percent to start the year.
Markets have turned more volatile after a relatively quiet 2017 and first month of 2018. Friday's drop follows a big pullback earlier in the week, led downward by health-care stocks. Wall Street observers have continued to number of culprits conspiring against the bull market, including investors taking some chips off the table.
"This is a continuation of weakness we saw earlier this week," Schulze said. " If you think about the market rallies since mid-December, it's been the market pricing in the realities of tax reform. Now that this is priced into the market, investors are looking to take some of the profits off the table."
The airwaves and chatter have been flooded in recent weeks with speculation of a market pullback like the one that thundered in on Friday.
"It looks like the beginning of a market correction," said Luke Tilley, chief economist at Wilmington Trust, the wealth and investment advisory arm ot M&T Bank. "It's not something that is very surprising, given the low amount of volatility that we saw in 2017."
Stock market decline of roughly 10 percent are generally considered a correction.
"We expected this volatility to be higher and that there would be a correction sometime this winter or spring," Tilley said. "We don't really expect a bear market unless there is a turn in the economy, which we are not seeing right now."
Chevron and Visa were helping pull thd won into the red, with the oil giant dropping 4.81 percent and the credit card company was down 3.43 percent. Exxon Mobil was down 6.61 percent on disappointing earnings. Apple was down 4.26, Goldman Sachs was down 6.68 percent, Google parent Alphabet was 5 percent in the red and Intel dropped 3 percent.
Amazon.com (founded by Washington Post owner Jeff Bezos) was one the few bright spots among major companies in the technology sector with a 4 percent plus gain.
Trading volumes were high, with the number of shares on the New York Stock Exchange expected to exceed a billion shares, or 25 percent or more above normal trading.
Some were ascribing the market decline to nervousness over the Robert Mueller investigation into President Trump, Russia and reports about a sensitive memo.
Wicker said even with a strong economy, a correction in the S&P 500 is long overdue.
"We haven't had a correction of 5 percent for over 400 days," he said. "That's a pretty long streak. You usually have a correction of that magnitude every 90 to 120 days."
Historically, he said, a strong January stock market tends to foreshadow a healthy year-long return. And he is predicting a good year for 2018.
Friday's decline "is nothing out of the ordinary," he said. There will be more market swings this years, and Wicker said he advocates riding it out.
"Don't try to time the market," he said.