Sam Collins

'Wall of Worry' Building

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Yesterday's broad-based sell-off was prompted by profit-taking after hearing about slower-than-expected economic growth in Japan. The selling, which began in Tokyo, spread to the United States on the heels of lower consumer numbers on Friday.

Japan's Nikkei fell 3.1%, and China's Shanghai Composite Index fell 5.8% -- its worst day since November. Europe opened lower and then regained about half of its losses, and the Dow Jones World Index fell 2.9% -- its worst loss since April.

The S&P 500 (SPX) opened lower and then traded in a narrow range for the remainder of the day. It finally closed off 2.43%, with the Dow Jones Industrial Average (DJI) down 2% and the Nasdaq (NASD) off 2.75%.

All of the S&P's 10 major sectors closed lower, with banks being the worst performers, off 5.1%. Basic materials stocks were big losers as commodities hit the skids. And health care stocks were the best performers with the sector down slightly.

Many analysts were looking for a correction, noting that August is usually a rough month for stocks.

Retail numbers on Friday shook confidence. Then, on Monday, Lowe's (LOW) reported a 19% decline in Q2 earnings, missing analysts' estimates, and the stock fell 10%. Home Depot (HD) fell 3.8% in sympathy with the LOW numbers. HD reports earnings today.