From an overview of consensus by John Cassidy:
Why, then, are the markets so disturbed? One possible explanation has to do with trading algorithms, which encourage trend-following and herding. Once stocks or bonds or oil prices make a sharp move, everyone piles on in the same direction, and the market’s over-all shifts are exaggerated. Even those hedge funds and other institutional investors that aren’t actively shorting tend to adopt a “risk off” strategy, which precludes them from buying very much in response to drops in the market.
Another possible explanation is that the markets, through the magic of aggregated private information, have discovered something that the economists have missed. Perhaps China’s economy is in much worse shape than the authorities are letting on, or big Western banks are much more exposed to the collapse in commodity prices than they are admitting.
Things that make the stock market both fascinating and frightening.