Dow Jones drops more than 1,000 points as volatility continues

The Dow Jones industrial average took another dive Thursday, dropping 1,033 points (4 percent) to end the day at 23,860.

The S&P 500 fell 101 points (3.8 percent) and the Nasdaq fell 275 points (3.9 percent)

What does it mean?

The stock market soared to record highs last month fueled by optimism about the Republican tax plan that included significant corporate tax cuts.

Now, a combination of concerns have led to sell-offs that are resulting in a market correction.

Increased government spending could drive up wages and prices, leading to inflation. The Congressional Budget Office estimates a potential two-year budget deal will result in a $320 million spending increase.

The growing deficit following the recent tax cuts and the potential budget deal could also push interest rates up.

A volatile market

Thursday’s drop continues a streak of extreme volatility in the market lately.

On Monday, the Dow dropped 1,100 points, the largest single-day point drop in history. It bounced back some Tuesday, but was down Wednesday before Thursday’s plummet.

“The dust hasn’t settled yet, and I think both buyers and sellers are trying to figure out what this market really wants to do,” Jonathan Corpina, senior managing partner for Meridian Equity Partners, told Reuters. “I would think that this continues to happen for the next few trading sessions for everything to kind of get flushed out.”