Stocks are flirting with a correction, with the Dow Industrials falling 8 percent from its all-time high in May. But one analyst said the carnage is healthy for markets. ‘I think we need to see a 10 percent correction in stocks in order to shake out some of the overbought factors within the market,’ said Michael Hewson, chief market analyst at CMC Markets, based in London. ‘If you look at the broader markets across the globe, the U.S. market is the one that hasn’t seen a significant shakeout.’ The S&P 500 hasn’t had a correction in almost four years. Corrections, defined as a 10 percent drop in a major stock market index, help investors sitting on the sidelines enter the market at a discount. While the S&P 500 is down 4.7 percent for the week, far from a correction, half of stocks within the broad index entered correction territory. TheStreet’s Scott Gamm reports from New York.
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