Economic News: The U.S. Markets are Decimated Overnight

The U.S. markets were roughed up in trading overnight. We not only lost all of the previous session’s rally but more. Investors did not care about corporate earnings or economic data but focused on the bigger global picture. This includes Europe’s continuing economic woes and the Middle East.

There are concerns over global growth and other headlines like Ebola and ISIS driving risk. Before Wall Street opened, data from Germany showed a 5.8 percent drop in the country’s exports. This added the tension over the poor German industrial numbers and output. There is serious concern that the European workhorse is slowing down. This is not good as growth in the European Union is already tepid. We are all waiting on Mario Draghi to fire that big gun. Question is, is when? Later in the day, Draghi stated there is concern over the ever slowing growth in the Eurozone. He also said they should strive to boost inflation. Stocks fell even further after those comments.

We are seeing investors’ loose optimism that fueled gains earlier this year. We are seeing them react as Ebola continues to spread and what the Fed’s next step after ending quantitative easing. When, and by how much, will they raise interest rates? That is now the focus. Will the U.S. economy slow when the Fed stops pumping money into the markets as well as deflation hurt the U.S. growth are two big questions right now.

There are also concerns on valuations, which are certainly high and representative of what is called a two speed global economy. This is where the United States looks healthy and good and the rest of the world looks weak.

Overnight the DJIA dropped 334.97 points, its worst selloff this year to end at 16,659.25. Caterpillar (CAT: NYSE) led losers here falling over three percent. All 30 components of the Dow bled red. The S&P 500 lost over two percent with the energy sector getting hit the hardest. Almost all of its 10 sectors were down. The Nasdaq Composite also get slammed. It was down 90.26 points to close 4,378.34.

Probably the biggest loser on the day was Gap (GPS: NYSE) which tumbled nearly 12.50 percent. The retail giant saw disappointing sales in September and there was also news that  their chief executive officer would be leaving the company.

Is this the big correction we have been talking about for the last several months? Possibly. It is only a matter of time before investors want to lock in profits making stocks affordable. After we correct, equities will move higher again. The U.S. economy continues to show improvement and added momentum.