This has introduced credit risk to impacted businesses as well. Credit risk means we could see less liquid debt markets which could decrease employment, investment, and long run GDP growth. All of this especially concerning given that the fed has only 1 - 2 more pulls at monetary supply via interest rates before they have to introduce more QE.
There are too many connections here to simply discount the long-run risk to the economy which is why you're seeing a sell off.
PwC's audit lead gave a great interview on Bloomberg the other day that I thought summed this situation up well. Paraphrased: Those that have been fixing their roof while the sun is shining are going to be just fine, but a lot of businesses didn't do that.
Businesses with high leverage, unsteady cash flows, flaky customers, and inefficient cost structures could be in trouble here.
I'm a buyer in this market, but I'm a buyer precisely because I have a long horizon. There's no guarantee that we get back up to these rich valuations any time soon.