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The S&P 500 index showed 2 new 52-week highs and no new lows, while the Nasdaq recorded 13 new highs and 21 new lows. The German Dax dropped 2.3 percent, while the French CAC 40 fell 2.4 percent. The Nasdaq Composite was down 274 points, or 3.9%, at 6,777.
The S&P 500 is down 9.3 percent from the record high it set January 26.
"The most important thing to remember is the stock market is not the economy".
Some of the market's biggest winners over the past year were leading the market higher. The 10-year Treasury yield hit a four-year high of 2.85 percent last Friday, after starting the year at about 2.4 percent (prices and yields move in opposite directions).
"The stock market has gone too far, too fast", said James McBride, managing director of the McBride Group. Gold prices fell 1.0% to a 2-1/2-week low. Britain's FTSE 100 shed 0.7 percent.
"There would be few places to hide from the risk-off atmosphere that is expected to extend its stay in Asian markets today in a significant manner", Jingyi Pan of IG said in a commentary. Japan's Nikkei 225 suffered the biggest losses of the day with a 4.73 percent slide, though it was down as much as 6.71 percent earlier in the session.
IOC President presents first gold of PyeongChang 2018 at Medals Plaza
Jessica Diggins placed fifth, missing a chance to become the first American woman to earn a medal in cross-country skiing. There is a pit-stop halfway through the race where athletes change skis and poles to go from classic to free technique.
Investors also had their eye on the budget battle in Washington.
Wall Street is also concerned with aspects of a bipartisan budget deal that would increase federal spending by $300 billion while suspending the debt ceiling for one year.
US stocks started to tumble last week after the Labor Department said workers' wages grew at a fast rate in January.
That followed the lead of Wall Street where the Dow Jones closed 4.5% lower. Facebook and Boeing have both fallen sharply. In a note written by John Normand to JPMorgan clients, inflation has suddenly become one of the hottest topics in markets, revitalizing many late cycle concerns over corporate margins, fed tightening, volatility, bond/stock correlations and asset allocation versus hedging strategies.
"We're telling [clients] that VantagePoint is forecasting it will keep going down, so they should probably take some money off the table", Lane Mendelsohn, vice president of Market Technologies, told Benzinga Wednesday. "We've had none since 2016", he said. "However, our view remains that it's just another correction", said Shane Oliver of AMP Capital in a report. It's still up 15 percent over the past year.