Hardware, software and semiconductors are the three top-performing groups right now, and there has been a decline in oil prices. These things are pushing the markets up.
The reason for the (technology) decline is the combination of the Cisco earnings and the comments from CEO John Chambers. He basically said what Intel said recently: that customers are getting very cautious and that spending on technology is slowing.
The combination of a decline in oil prices, however slight, and some fairly upbeat comments (by Fed officials), may have led Fed watchers to conclude the Fed may raise interest rates at its meeting in May, and then stop.
The stock market has become modestly overvalued and investors are using a variety excuses to take money off the table. I wouldn't be surprised if the current, corrective phase continues and the market declines another 5 percent.
The most important thing is that the stock market had declined to levels that were arguably undervalued, and that many aggressive managers also realized there was a great deal of pessimism.
It's a big drop, a very substantial drop. The magnitude of the decline is a surprise.
The decline will divert capital flows away from U.S. investments.