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Bull markets, bear markets and corrections
· Concept
Fact, law or dataA rule, statute, definition or measured number.
A bear market is a stock drop of 20% or more from a peak; a correction is 10–20%; a bull market is a sustained rise.
See it on the Money & Finance map →How it works
The thresholds are Wall Street conventions, not official rules. Since 1946 the S&P 500 has had about a dozen bear markets, falling roughly a third on average; the worst were 2000–02 (about 49%) and 2007–09 (about 57%). Bull markets have lasted far longer and gained far more. Corrections happen most years. In April 2025 tariff fears pulled the S&P 500 down about 19%, just short of a bear market. The names' origins are uncertain; the popular image is bulls tossing upward, bears swiping down.
Why it matters
Knowing how deep and how often drops come, and that they have always eventually recovered, helps investors size risk and avoid selling at the bottom.
Think of it like
A bear market is like a vacancy spike: values reprice and income dips; owners with staying power recover, over-leveraged ones may be forced to sell.
Facts, rules and data
S&P 500 price data back to 1928 (years before its 1957 launch reconstructed), plus studies by S&P Dow Jones Indices, Ned Davis Research and others that count and measure each cycle.
Debates and risks
No reliable method predicts when bear markets start or end; whether any timing signal beats simply holding is debated.
Inside this (1)
Connections (3)
▸Measuring risk: volatility, drawdown, recovery time quantifies the damage of Bull markets, bear markets and correctionsFact, law or data
The connection
A bear market is a fall of 20% or more from a peak; a correction is 10%. Risk measures say how bad each was: depth, length and recovery. The 2020 Covid bear fell about 34% in 33 days and recovered in five months; 2007–09 fell about 57% and took until 2013 to recover.
When and why
Every downturn since 1929; recent cases include 2000–02, 2007–09, 2020 and 2022, which fell about 25% and regained its high in January 2024.
How we know
Index histories from S&P Dow Jones Indices; the 20% threshold is a market convention, not a law.
Debates and risks
Whether past drawdowns predict future ones, and whether price-only measures, ignoring dividends and inflation, misstate recovery times.
▸COVID-19 crash and rescue (2020) caused the fastest-ever drop into Bull markets, bear markets and correctionsFact, law or data
The connection
As COVID shut down economies, the S&P 500 fell from a record high on February 19, 2020 into a bear market in just 16 trading days, the fastest ever, and bottomed on March 23, down about 34%. Massive Fed and government rescues then fueled a new bull market; the index set a new record by August.
When and why
US markets, February to August 2020; trading halted four times in March under circuit-breaker rules.
How we know
Daily S&P 500 closing prices and NYSE circuit-breaker records.
Debates and risks
How much of the rebound came from Fed and fiscal support rather than business prospects, and whether rescues teach investors to expect bailouts.
▸Shanghai Composite index and China's 2015 stock crash crashed 40%-plus in 2015, a classic case of Bull markets, bear markets and correctionsFact, law or data
The connection
The index more than doubled in a year, a textbook bull market, then fell about 43% between June 12 and August 26, 2015, and nearly half by early 2016, a bear market far past the usual 20% threshold. A new circuit breaker in January 2016 was scrapped after four days.
When and why
Shanghai, June 2015 to January 2016.
How we know
Index price records and regulators' announcements of the January 2016 circuit breaker and its suspension.
Debates and risks
Whether government buying shortened the bear market or prolonged the pain by holding prices above where buyers would trade.