There's nothing terribly wrong.  It's just that bull run from 2003 and
the large gains since the middle of 2006 have many investors sitting
on large gains.  It makes everyone nervous & they all start talking
about how the market is due for a "correction".

So, teetering at the top, it doesn't take much to spark a sell-off.
The overnight drops in China, the sub-prime mortgage fiasco, poor
existing home sales, fears of a recession combined with early sellers
wanting to take profit before it is reduced or eliminated and you have
a recipe for a major drop.

As I write this DJIA is down 276 (2.2%) for the day.  The biggest
single day drop in over 8 months.  And the sell-off is only
accelerating as the day wears on.