The Dow dropped 326.05 points or 2.1% and is now down 7.3% for the year.

Automakers reported that car sales fell last month. However, the weather was terrible in most of the nation. Sales west of the Rocky Mountains, where weather was normal, were good. The 10-year treasury note rallied as the rate fell to 2.585% and gold moved higher.

The Institute for Supply Management’s index of manufacturing came in at 51.3 in January. The index was 56.5 last month and the consensus was 56.1. Again, the weather was brutal in January and we do not know how much that really impacted this number.

The psychology of the market has now clearly changed even though the economics are pretty consistent. The markets were probably propelled higher than maybe they should have been last year in large part due to QE. QE resulted in investments and decisions that might not have been made had interest rates not been manipulated in recent years. That, coupled with a change in psychology and some untimely news overseas (and all of these factors might be related in some manner) have damaged the market.

But the truth is that markets do not go up forever and sell offs can often represent opportunity. And QE had to end sooner or later. Time will tell…