What's going on?

Hasta la vista, baby: after hitting record highs just last month, the Nasdaq Composite index ��dominated by major US tech stocks � crunched into a technical �correction� this week.

What does this mean?

The Nasdaq had jumped 31% last quarter and another 20% since July, reaching its highest level in history (even when adjusting for inflation). But it fell this week into its fastest-ever correction, dropping more than 10% from that recent peak. There�s nothing particularly special about the double-digit decline, beyond the potential indication of investor pessimism. A more worrying � yet unlikely � threshold would be a 20% drop, which heralds a �bear market�.

The correction might�ve been down to investors� long-predicted �rotation� out of speculative Big Tech stakes and into economic-growth-reliant �cyclical� and cheap-looking �value� stocks (tweet this). Other major US indexes were dragged down too � and tech�s tumble was likely exaggerated by its prior reliance on investors buying optimistic short-term stock options.

Why should I care?

For markets: Dude, where�s my Tesla?

The electric carmaker�s stock � a Nasdaq component � has fallen more than 20% in the last few days. That may be due in part to the recent revelation that its shares won�t yet be included in the most influential American stock index of them all. Some $4.3 trillion is indiscriminately invested in S&P 500 stocks via exchange-traded funds, and the expectation was that Tesla would soon get in on the action. Without that advantageous autopilot, investors � who�ve seen Tesla�s share price rise 300% this year � might�ve been minded to sell down stakes and take some profit.

The bigger picture: No stop signs, speed limit.

US stocks bounced back on Wednesday � though long-term investors probably weren�t surprised. According to learned stock historians, a short, sharp selloff following a steep recovery is par for the course as markets settle back down. And according to analysts at investment bank Morgan Stanley, company earnings are improving more quickly than expected�� likely giving stocks another boost.