Stock markets in the U.S., Japan and Europe appear to have joined emerging markets in the doldrums, but is the sharp selloff just a rumble or is a deeper rout on its way?
The consensus so far is this: Equities could fall further especially if economic data disappoints, but until that happens the big picture of a brighter growth outlook has not changed so don't panic just yet.
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"The interesting thing is how much movement there has been on so little information," said California-based John Rutledge, chief investment strategist at private investment firm Safanad. "We've had a weak U.S. ISM number and China PMI which registered just a small fall, so that would suggest this (selloff) is a correction," he said referring to recent data showing slowing factory activity in China.
"The one thing that is different this time around is that the U.S., Japan, and Europe are growing and that means higher interest rates, so people who had exposure to emerging markets when rates were low are closing out of those positions," he added.
Japan's Nikkei stock index fell 3 percent on Tuesday to its lowest level in almost three months following a sharp fall in U.S. stocks. weak economic data sparked fears of a slowing U.S. economy. U.S. stocks saw their worst start to February since 1933 as overall U.S. factory activity hit an eight-month low in January.
The Nikkei, is now in correction territory with a fall of more than 10 percent from a six-year high of 16,320 points hit in late December. European equities were also lower on Tuesday.
(Read more: How bad will the Nikkei meltdown get?)
On Monday, the S&P 500 suffered its worst single-day drop in seven months after the Institute for Supply Management (ISM) said its index of national factory activity fell to its lowest level since May 2013.
That news follows disappointing data from China last month, adding to jitters in emerging markets that have been hurt by a scaling back of U.S. monetary stimulus.
"You have to decide what's going on. Is this a correction in a bull market or the emergence of something fundamental to the downside?," said Bob Doll, chief equity strategist at Nuveen Asset Management.
"Our view is the former, that this is a normal correction. We had one less than a year ago," he said, adding: "The question for U.S. stocks, aside from will there be significant contagion from emerging markets, is how strong is U.S. growth going to be, and until we get some answers we will be flapping in the breeze."
Both the blue-chip Dow Jones Industrial Average and Nikkei have this week dropped below their 200-day moving averages for the first time since 2012, a major bearish signal from a technical perspective.
The S&P 500 is down about 3.6 percent so far this year, but is up 19 percent over the past year.
Japan's Nikkei, which surged 57 percent last year, isn't the only market in correction mode. Russia's stock market is also down more than 10 percent since the start of the year, while stocks in Brazil and Turkey are not far behind will falls of roughly 9 percent.
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"The global economy is not in a significantly different position to where it was a month ago when stocks were much higher," said Russ Koesterich, BlackRock's global chief investment strategist. "What has changed is sentiment especially towards emerging markets. From that perspective, there's probably some more downside. If we pull back another 4-5 percent, that's a good buying opportunity."
—By CNBC's Dhara Ranasinghe. Follow her on Twitter at