Reasons behind today's sell-off on Wall Street

Of course, it cannot be said at this point that today's declines on Wall Street are the beginning of a new trend. From a long-term perspective, today's declines are still not too large, although the scale of declines on the Nasdaq is still impressive - over 4%. Where did the declines come from, and did we have warning signals?
In many aspects, US stocks are heavily overvalued, as indicated by high P / E and P / B ratios. The scale of increases on Wall Street after mid-March, i.e. only during the pandemic, is really impressive. At a time when we saw significant increases, the economy was taking the biggest blows. At this point, Wall Street is already clearly above pre-pandemic levels (S&P 500 and Nasdaq). Could we have expect a correction?
Yes! Of course, with such a rapidly rising market, it was very difficult to indicate when such a moment would come. One of the first warning signals was a very strong increase in the VIX index, which took place on August 27. Currently, the scale of growth of the VIX is very similar. The contract for VIX (VOLX on xStation5) rose to 33 points, while in the previous weeks it averaged around 23-25 ​​points (which in the historical context is still a high level indicating a lot of uncertainty in the markets).

The VIX index increased sharply on August 27 and today. However in August we did not observe any declines on the stock exchanges. Today is completely different. Last time such large declines took place at the beginning of June. In this case, we should take into account the possibility that the drops may reach 3,300 pts level. Interestingly back then the VIX rose much stronger than recently. Source: xStation5

Secondly, significant changes in the US dollar exchange rate. The dollar has appreciated many times against the euro recently. It was the end of July, then the second week of August, the third week of August and the current wave which started on September 1.
Another thing to keep in mind is the continued disagreement in the US Congress. At this point, Democrats are pointing out that the Republican demands are unreasonable. Interestingly, the talks continue ...
The upcoming US elections should not be forgotten either. In theory, Trump's win should be positive for Wall Street. Support for Trump is rising again, but the uncertainty is still quite high. Also, the recent assurances from the Fed may have encouraged investors to take profits.
The last and probably the most important factor that sealed the declines are the problems of two technology giants: Apple and Tesla. The latter company is perhaps the biggest winner of the post-pandemic rally. The company is fundamentally overvalued and the emergence of negative information regarding the sale of its new shares (dilution of profits for current investors) makes the company less attractive to them.

Declines on Nasdaq are stronger compared to the S&P 500. As one can see, index is approaching the lower limit of the range of the largest correction which took place in June and mid-July. Source: xStation5