Glossary · Defined term
Bear market
A bear market is a prolonged broad price decline, commonly defined as a drop of 20 percent or more from recent highs.
Last updated Oct 2, 2026
What it means
A bear market is a prolonged period in which investment prices fall broadly, most commonly defined as a decline of 20 percent or more from recent highs. The label describes the whole market or a major index, not a single stock having a bad month. Bear markets are usually driven by recessions, rising interest rates, or a sharp loss of investor confidence, and they can last months or years. Trading during a bear market tends to feature high volatility and brief rallies that fail to hold. Historically, bear markets have ended when economic conditions stabilize and prices fall far enough to attract buyers again.
An example
For illustration, if an index peaks at 5,000 and then slides to 3,900, that 22 percent drop crosses the conventional 20 percent line and would be called a bear market. Investors would not use the term for a 5 percent dip that recovers in two weeks; that is a correction or a pullback, not a bear market.