Stocks dropped Thursday as risk-off sentiment returned with concerns about a slowing economy and fears that a significant correction remains overdue. The Dow Jones industrial average lost 0.8 percent, the S&P 500 fell 1.1 percent, and the Nasdaq dropped 1.9 percent. US Treasury yields, oil prices and the dollar all declined.

Renewed focus on high stock valuations weighed especially on megacaps, with Nvidia and Tesla leading the selloff. A US Challenger layoffs report showing a big uptick in layoff plans in October added to news about layoffs from big tech companies to underscore worries about a slowdown and the threat of weakening consumption.

Cautious-sounding comments from Federal Reserve officials depressed risk appetite too. Several officials repeated Fed Chair Jerome Powell's recent comment that a December rate cut is far from a done deal given lack of visibility on the economy and ongoing inflation worries.

Momentum plays including AI stocks and crypto-linked shares were among the day's worst performers. Even favorable earnings news from shares including Qualcomm were swamped by the bearish mood.

Among sectors, worst performers included restaurants, cruise lines, software, and engineering & construction. Holding up best were hotels, big banks, pharma, and energy.

Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.

Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.