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Random freezes, missing sound and display glitches usually trace back to one bad driver. Find and replace yours safely.Free scan · under a minuteA market correction is commonly described as a decline of at least 10% from a recent high. It is a market convention, not an official classification, and it does not predict whether prices will recover or fall further. The benchmark matters: an index can enter correction territory even when individual stocks move by very different amounts.
How much does the market have to drop to be a correction?
There is no universally accepted or official definition. In common usage, a correction occurs when a stock index or other investment falls about 10% from a recent peak. Charles Schwab describes the usual range for a major stock index as a decline of more than 10% but less than 20% from its recent high; Fidelity likewise notes that the term has no official definition. The 10% marker is a convention, not a formal SEC rule. Fidelity explains the common usage, and Charles Schwab discusses the threshold.
The percentage is measured from the investment’s previous high, not from the price an individual investor paid. The term can describe a broad index or a single investment. A broad-market index reaching the threshold does not mean every company in it fell by 10%; an individual stock can also fall that far while the wider market does not.
Is a correction the same as a bear market?
No. A correction is generally the shallower decline; a bear market is conventionally associated with a larger, sustained fall. Investor.gov says a bear market generally occurs when a broad market index falls by 20% or more over at least two months. That is a general description, not a rule used identically by every market participant. Investor.gov’s bear-market glossary provides its definition.
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| Term | Common reference | What it describes |
|---|---|---|
| Market correction | About 10% down from a recent high; no universal official definition | A price decline in an index or individual investment |
| Bear market | Investor.gov’s general description: a broad index down 20% or more over at least two months | A deeper, sustained decline in a broad market index |
For comparison, Investor.gov generally describes a bull market as a 20% or greater rise in a broad index over at least two months. As with bear-market terminology, this is a general description rather than a universal timing rule. See Investor.gov’s bull-market glossary.
What causes a market correction?
The label describes the size of a price move, not its cause. Corrections can follow political or global news, economic data, shifts in investor sentiment, or company earnings and results that disappoint relative to expectations. Several forces can contribute at once; calling a decline a correction does not establish that a recession or another specific event caused it.
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How long does a correction last?
There is no reliable timetable for an individual correction. Fidelity cites an average duration of about 115 days, attributing that figure to Yardeni Research, but the cited article does not detail the sample method or exact definition. Treat it as a historical average, not a forecast: a particular decline may reverse sooner, last longer, or deepen into a bear market. No threshold tells investors in advance which path prices will take.
How common are corrections, and what do historical figures show?
Fidelity’s analysis of the S&P 500 from 1980 through 2025, using data through December 31, 2025, found at least a 10% peak-to-trough decline in 48% of calendar years. A decline of at least 5% occurred in 93% of those years. Fidelity defines the annual decline as the largest peak-to-trough drop within each calendar year.
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Over that same period, Fidelity reports an average S&P 500 calendar-year return of 13.3%, including index price appreciation and dividends. This illustrates that an intra-year decline can occur in a year that ultimately has a positive return; it does not mean every correction recovers quickly, nor that an investor’s portfolio will match the index. Fidelity also says the S&P 500 traded at least 10% below a recent high more than one-third of the time since 1927 and subsequently recovered from those drops. Past performance does not guarantee future results. Fidelity’s correction analysis describes its historical data and qualifications.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What should investors consider during a correction?
A correction alone is not a buy or sell signal. Any decision depends on personal circumstances, including goals, time horizon, financial situation, and tolerance for risk. Fidelity discusses keeping those factors in view, along with diversification and rebalancing, rather than treating a market threshold as a forecast. These general considerations are not individualized investment advice.
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Be especially cautious about trying to trade short-term price swings. The SEC’s Office of Investor Education and Advocacy warns that “Short-term trading, including trading aided by the use of margin or options, can lead to significant and unanticipated losses for retail investors.” The bulletin, dated January 29, 2021, is general investor education. Read the SEC investor bulletin on performance claims.
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