Financial Terms / A - B / Bear Market

Bear Market

A bear market is broadly defined as a 20% drop in the value of a security or an index from its recent highs. Generally, the term bear market is used by investors to denote a price drop of greater than 20% in an index such as the S&P 500 or the NASDAQ.

During bear markets, investors are pessimistic about the future of the stock market and the economy in general, and a bear market can be a sign of an upcoming recession. Bear markets can last anywhere between a couple of weeks to several years. 

The term “Bear market” or “Bearish” denotes a downward movement of prices as it resembles a bear attacking from above and then swiping its paws downwards.