The deepest one-day selloff in Wall Street stocks in eight months has investors using the market equivalent of a dirty word: "correction".

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With traders spooked by rising US Treasury yields and fears of a deepening US-China trade conflict, the benchmark S&P 500 index on Wednesday dropped 3.29 percent, its worst one-day decline since February, bringing its loss to almost 5.0 percent since closing at a record high on September 20.

Many investors define a stock market correction as a fall of at least 10 percent from a high, often as a reaction to excessive gains.

“It’s probably the beginning of the correction," said Oliver Pursche, vice chairman and chief market strategist at Bruderman Asset Management in New York.

"It’s going to come down to earnings. The big concern isn’t really what third-quarter earnings numbers are, but really what the outlook for the fourth quarter and first quarters are."

Fears of a potential correction became more acute as the S&P 500 technology index plummeted 4.77 percent, the deepest one-session decline since 2011 for the sector behind much of the market's gains in recent years.

US President Trump blamed the Federal Reserve, which he said has gone "crazy" raising interest rates.

“Actually it's a correction that we've been waiting for for a long time, but I really disagree with what the Fed is doing,” Trump told reporters before a political rally in Pennsylvania.

Investors are worried about how aggressively the Fed will raise interest rates, and some are skeptical about whether the central bank will support markets the way it was seen to have done under previous Fed chairs.

A stock market downturn hitting voters' retirement savings would be inopportune for Trump and the Republican party ahead of US midterm elections on November 6.

The S&P 500 index fell 10 percent in early February from a high the previous month, raising fears that a decade-old bull market was ending.

However, fueled by the deep corporate tax cuts passed by the Trump administration last year and an expanding economy, Wall Street deftly recovered. It racked up a 2018 gain of nearly 10 percent in late September, until soaring 10-year US Treasury bond yields and trade policy related worries sent investors fleeing for safety.

"When interest rates go up it can throw a cold towel on an overheating economy, and that's what it looks like is happening now," said Sandy Villere, a portfolio manager at Villere & Co in New Orleans.

US stocks are widely considered to be in the longest ever bull market, which started in March 2009, when investors grappled with the global financial crisis that had vaporized over half of the US stock market's value.

Since then, the S&P500 index has more than quadrupled, and many investors have been debating when, not if, the run-up in stock prices would end.

"The market has been on a 10-year bull run and we have seldom seen a 10 percent correction during that time. Every time we get around that number, markets come rallying back. What’s different now is that the 10-year bond yield is much higher. I think we're getting an overdue correction in the market,” said Trip Miller, managing partner at Gullane Capital Partners in Memphis.

Hinges On Earnings

Whether the S&P 500 index slides into a prolonged downturn may hinge on what companies say about their outlooks when they report their quarterly results in coming weeks.

Analysts expect aggregate S&P 500 earnings per share to surge 21 percent, year over year, in the September quarter and 20 percent in the December quarter, according to I/B/E/S data from Refinitiv.

But in 2019, deep corporate tax cuts that started in 2018 will be a year old, and companies are unlikely to repeat the same strong earnings growth they saw this year. Earnings repatriated from abroad this year as part of the tax overhaul may lead to fewer big increases in stock buybacks next year.

Executives on quarterly earnings call will also provide details about how they expect Trump's trade conflict with China to affect their businesses.

September consumer price data due on Thursday might fuel worries that the Fed may raise interest rates more aggressively than previously thought.

"The market is digesting the potential that rates moving upwards eventually seep into the real economy in the form of mortgage rates, auto rates, student lending rates," said Mona Mahajan, US investment strategist at Allianz Global Investors in New York. "What we're seeing here is the market positioning for potential lower growth going forward."