A somewhat puzzling pummeling on Wall Street

Stocks got slammed Thursday, suffering their worst one-day loss in months and leaving investors and market watchers bewildered.

No obvious reason accounted for the drop. Could it be related to Apple (AAPL), which saw shares slide 3.8 percent after an iPhone software glitch? Was it the ongoing Russia-Ukraine conflict? The U.S.-led airstrikes in Syria? Weak U.S. durable goods orders in August?

No one was sure Thursday. Certainly, the market has been taking geopolitical risks in stride for some time. The durable-goods report wasn't much of a surprise, either, although the 18.2 percent drop in orders was worse than the 17.3 percent drop economists expected. And Apple's glitch really wasn't enough to take down stocks across the board.

No, it didn't seem like any of those factors was responsible for the 1.6 percent drop in the S&P 500 index or the 1.5 percent slump in the Dow Jones industrial average. The S&P 500 and the Dow haven't seen a day like this in months. The performance was particularly surprising given that stocks had basically been flat since early July.

The Nasdaq Composite did even worse, falling 1.9 percent to 4,467. And small-cap stocks, which have been weak for a while, took another beating, with the Russell 2000 down 1.6 percent.

Analysts and traders scrambled to make some sense of the damage. Rumors were zipping around, including the idea that one major seller decided to pare down and created a domino effect of selling. Some thought that trading was light due to the Rosh Hoshana holiday, leaving more room for market volatility.

One trader, Art Cashin, even suggested the sell-off may have some basis in astrology, saying in his daily market notes that astrological charts were forecasting this week as one of "fertile ground for surprises."

The consensus seemed to center around the death-by-a-thousand-cuts theory: The market is buckling under the weight of too much news, and though none of it is hugely significant, all of it is bad. "There's just a convergence of many negatives at once, and on a day when there's less volumes," Tom Carter, managing director at brokerage JonesTrading, told The Wall Street Journal. "It tends to accentuate the move."

Whatever the reason, Thursday's decline has market watchers concerned about what happens next. Their worries were reflected in the CBOE Volatility Index, or the VIX, which saw a nearly 18 percent jump on Thursday. Known as the "fear index," the VIX is considered a gauge of how investors view future market volatility.

"Clearly there has been a rising level of concern among institutional investors about the market feeling toppy," said Nicholas Colas, chief market strategist at ConvergEx, on CNBC.

For whatever reasons, investor unease is surely growing, and that could be paving the way for a rocky October.

  • Kim Peterson

    Kim Peterson is a financial journalist covering business and the economy. She has written for several online and print publications, including MSN Money and The Seattle Times.