Traders work on the floor of the New York Stock Exchange. Photo: Reuters/Lucas Jackson

The Dow Jones Industrial Average rallied to start the trading day on Tuesday, before quicky edged back down and then climbing back into the green again.

The Dow opened trading having fallen past the 10% threshold for being defined as a “correction,” but made up ground, up 0.77% as of just before 11:00 am. The S&P 500 was flat after rallying early and then drifting lower for most of the morning.

The market plunge over the past few days has been attributed to a number of factors, though suspected culprits seem unlikely to be enough to blow up the market. Wage growth numbers in the US shocked investors, who for the first time in a long time saw signs of a pickup in inflation.

But concerns of central bank tightening policy more aggressively amid stronger inflation may be overblown, and the panic looks simply like investors snapping out of complacency in the face of persistently low inflation. Price pressures still remain subdued when put in historical context, and there are reasons to expect that wage growth, as elusive as it has been, will begin to tick up eventually.

With stocks as pricey as they are, any cracks that appear, for instance regarding investor confidence in earnings projections as we have noted, could be painful.