The intensifying global equity sell-off this week has rattled many investors. More turbulence can be expected in the short term, but the recent volatility isn’t particularly extreme in historical perspective, and long-term market fundamentals still look solid.

Global stocks have fallen by about 9% so far this month, through the October 24 market close. International and emerging-market stocks led the declines earlier in the month, but US stocks have now followed. By Wednesday’s close, the S&P 500 had also declined by nearly 9%, with high-growth technology stocks dragging the market down. The MSCI Europe had dropped by 7.5% for the month while Japan’s TOPIX was down 9.1%. Stocks showed signs of a rebound midway through Thursday’s session, but are clearly still unsettled.

Much of the mayhem is being driven by concerns about corporate profits. Heightened uncertainty around the pace of expected earnings growth has triggered a recalibration of equity valuations that is still unfolding—and will probably continue to fuel volatility. Still, it’s important to note that US earnings growth is decelerating—not declining—and the sell-off will create more attractive valuations globally.

Three Culprits Behind the Recent Market Volatility

As we see it, this week’s declines have been driven by three main concerns:

1) The recent rapid rise in interest rates. The 10-Year US Treasury yield rose from 2.8% in mid-August to 3.2% on Wednesday. While a 40 basis point move in six weeks isn’t uncommon, it is a large move in a short period of time that became worrisome for many investors.

2) Market leadership sell-off. In recent years, technology stocks led the US market—particularly the high-growth FAANG stocks (Facebook, Amazon, Apple, Netflix and Google). This subgroup of stocks has dragged the market lower over the last few days as investors took profits. When market leaders are sold indiscriminately, all sectors feel the pain.

3) Trade-related warnings on earnings. Companies in multiple sectors have reported concerns about the negative impact of trade tensions on forward earnings. Disappointing quarterly results continued to stoke investors’ jitters over future growth in corporate profits—especially in the US.

How Extreme Is the Sell-Off?

With three big concerns feeding investor anxieties, global equities have fallen by 3% since the start of this week (as of Wednesday), while the S&P 500 Index has dropped by 4%. Declines of this size aren’t common—but they’re also not extraordinary; it just feels worse because markets have been extremely calm for years.

On Wednesday, the VIX index of US market volatility moved up to 22. That’s slightly above its long-term average, but nowhere near the 37 mark that it reached earlier this year during the February–March sell-off. This upward move, however, does suggest that markets may stay volatile for a while, as we’ve anticipated.