Market ups and downs

Markets go through long rises and sharp falls. Looking at past ones helps put them in perspective.

Click any Tap any word with a dotted underline to see what it means.

Stock markets don't move in a straight line. Over the decades, the U.S. market has gone through long periods of rising prices and painful falls. A few common words are used to describe them.

• Bull market: a long period of rising prices, often defined as a rise of 20% or more from a low.
• Bear market: a fall of 20% or more from a peak.
• Correction: a smaller fall, of 10% to 20%.

Three falls in recent history

• 2000 to 2002: after the internet boom, the S&P 500 fell about 49%, and the Nasdaq, full of technology companies, about 78%.
• 2007 to 2009: during the financial crisis, the S&P 500 fell about 57%. It only got back to its 2007 peak in 2013.
• 2020: as the pandemic began, it fell about 34% in just over a month, and was at a new high by August.

Not every fall ends the same way

In the past, the S&P 500 as a whole eventually reached new highs after each of these falls, but the wait ranged from a few months to many years. Single companies are different: some never recover. Lehman Brothers, a large bank, went bankrupt in 2008, and its shareholders lost almost everything. How much a fall matters to someone also depends on their time horizon.