This week's shipping showdown could have had some effect on U.S. stock prices, Allen said. Allen said U.S. investors are sensitive to the trade issue because many American companies retail Japanese consumer electronics. A trade embargo on ships carrying such goods would translate into higher prices for consumers. The approaching holiday shopping season amplifies investors' reactions, he said. Allen agreed this weekend's date had a role in the Dow's recent decline.
People are a little schizy.
Perhaps the most important cause of this week's sell-off is the market's unprecedented recent success. The Dow Jones average is up 21 percent for the year, and despite many investors' fears, the Fed hasn't raised interest rates since March. Allen said he thinks some investors now are getting out of the stock market or hedging their bets by selling off some of their equity because they think the market is at its peak. Any little shake is going to be amplified. Two separate reports released by the government Friday also heightened investors' inflationary fears and likely affected the stock market.