Investors blink as rally hits speed bump

Things change on Wall Street. Sometimes quickly.

And so it is that a stock market that was flirting with new highs has suddenly hit a speed bump.

Talk of the stock market maybe making new highs has given way this week to talk of the Nasdaq composite nearing correction territory, or a 10% drop from its high. Talk of the broad Standard & Poor’s 500 stock index in danger of sinking back into the red again for the year. And talk of the Dow Jones industrial average’s year-to-date gains dwindling as well.

The changing investment narrative, of course, can be blamed on the Nasdaq finishing lower nine of the past 10 sessions. On iPhone maker Apple for posting earnings that fell shy of Wall Street expectations and telling the world that quarterly sales of iPhones fell for the first time -- ever. On China’s economy still not firing on all cylinders. On the Japanese yuan and the euro actually rising in value despite the fact both central banks are easing — not tightening — monetary policy (which is the exact opposite of what those central banks intended).

Some investors also blame the rise of unpredictable Donald Trump, who surprised everyone and appears to have locked up the Republican presidential nomination despite negative messaging. Indeed, the Republican's presumptive nominee is warning of a coming recession, talking up a coming trade war with China and an anti-immigration message centered around the building of a wall on the U.S.-Mexican border. Those types of things worry investors at home and abroad.

The market is showing signs of fatigue. After back-to-back losses Tuesday and Wednesday, the Nasdaq kicks off Thursday’s session 9.5% below its record high and in danger of falling into correction territory. The S&P 500 is up just 0.4% for the year. And the Dow, after falling four of the past five sessions, is clinging to a 1.3% gain for the year.

So what should investors be watching? Whether the market can reverse its recent fall.

In pre-market trading Thursday, investors appear to be in a bullish mood. The Dow is trading up 5o points, or 0.3%. The S&P 500 is 0.3% higher and the Nasdaq is up 0.3%.