Fully discounted the economy recovery?

Has the recent price ran up discounted all the economy recovery? The US markets closed 2% down overnight despite of quite a number of good news being announced on the same day:

1. The American manufacturing expanded

Sept. 1 (Bloomberg) -- American manufacturing expanded for the first time in 19 months, and pending sales of existing homes rose more than forecast, indicating the worst recession since the 1930s has ended.

The Institute of Supply Management’s factory index posted its biggest two-month gain since 83, rising to 52.9 in August; readings higher than 50 signal an expansion. The National Association of Realtors said signed purchase agreements for existing properties jumped 3.2 percent in July, for record sixth consecutive gain.

2. Pending sales of existing home rose in July, six in a row

Sept. 1 (Bloomberg) -- The number of contracts to buy previously owned homes rose more than forecast in July and increased for a record sixth consecutive month, reinforcing signs that the housing market is steadying.

The index of signed purchase agreements, or pending home sales, gained 3.2 percent after a 3.6 percent rise in June, the National Association of Realtors said today in Washington. The index level of 97.6 was the highest since June 2007. Compared with July 2008, pending sales climbed 13 percent.

3. U.S. Auto-Sales rate may be highest since April 2008

Aug. 31 (Bloomberg) -- U.S. auto sales in August probably will run at the highest rate since April 2008 after the federal government’s “cash for clunkers” rebates fueled demand. The so-called seasonally adjusted annual rate for this month will be 14.3 million, the average estimate of 10 analysts surveyed by Bloomberg.

The figure, an industry benchmark, hadn’t exceeded 10 million in 2009 until the incentive program began in July. Ford Motor Co. may post the biggest monthly sales gain.

4. China Manufacturing Grows at Fastest Pace Since 2008

Sept. 1 (Bloomberg) -- China’s manufacturing expanded at the fastest pace in 16 months in August, driven by record lending in the first half of the year, two surveys showed.

The Purchasing Managers’ Index rose to a seasonally adjusted 54 from 53.3 in July, the Federation of Logistics and Purchasing said in an e-mailed statement today in Beijing. A PMI released by HSBC Holdings Plc also climbed.

With so many good news being announced including a number of European countries were out of recession and yet markets tumbled, the market is in search of reasons. The inconvenience truth was, a-ha --- banking sector is in trouble again. KBW Bank Index fell 5.8%.

My take is everyone is anticipating September to be a very weak month, so they just took profit off the table. There will be some chaos but I think correction is quite normal in my view, of which I have been waiting patiently since 2 - 3 weeks ago.