What is a bear market? Bull vs bear market explained with real examples

Education only, not financial advice. Figures come from official sources, each with its date; past market moves do not predict future ones. How we work

A bear market is a period when stock prices fall and keep falling, usually defined as a drop of 20% or more in a broad market index from a recent high. The most recent case in the S&P 500 came in 2022, when the index fell 25.4% between January 3 and October 12.

The opposite, a bull market, is a period of rising prices, usually marked by a gain of 20% or more from a low. Both terms are conventions used by investors, regulators' education pages and the press. No agency declares them, and no law defines them. This page explains how the labels are applied, shows the bear markets of the last 25 years with figures computed from official data, and covers the short rallies that often happen inside them.

What is the definition of a bear market?

The SEC's investor education site, Investor.gov, defines a bear market as "a time when stock prices are declining and market sentiment is pessimistic." It adds that a bear market generally occurs when a broad market index falls by 20% or more over at least a two-month period.

FINRA, the self-regulatory body for US brokers, gives the same threshold without the time condition. In its glossary of terms for stressed markets, it says that a decline of 20% or more in a broad market index "is said to meet the threshold of a bear market." FINRA applies the term to stock indexes, bond indexes and commodity prices.

Three details matter when you see the term in the news:

• It is measured from a recent high. The fall is counted from the highest close before the decline, not from the start of the year.
• It usually refers to a broad index. The S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite are the usual US benchmarks. A single stock can fall 20% without anyone calling it a bear market.
• Closing prices are the norm. An index can dip below the 20% line during a trading day and close above it. The figures on this page all use daily closes.

A fall of 10% to 20% is usually called a market correction. A very fast, very deep fall over days or weeks is usually called a crash, and our pillar page on stock market crashes lists the main ones.

What is a bull market?

Investor.gov defines a bull market as "a time when stock prices are rising and market sentiment is optimistic," and says one generally occurs when a broad market index rises by 20% or more over at least a two-month period. FINRA describes the bull market as the contrast to a bear market, a large increase in prices.

Because the two definitions are mirror images, the end of a bear market is usually dated to its lowest close, the trough. A new bull market is said to begin there once the index has risen 20% from that low. The label is only clear in hindsight: on the day of the trough, nobody knows it is the trough.

Two examples from the S&P 500 data on FRED show how long that confirmation can take:

• After the 2020 low on March 23, 2020 (2,237.40), the index first closed 20% above it on April 8, 2020, 12 trading days later.
• After the 2022 low on October 12, 2022 (3,577.03), the index first closed 20% above it on June 8, 2023, almost eight months later.

Bull vs bear market: what is the difference?

The table sets the two side by side, using the Investor.gov and FINRA definitions.

The bull vs bear market comparison is often presented as a cycle, with each bear market ending in a bull market and each bull market ending in a bear market. In the data, the length and depth of each phase vary widely, as the next section shows.

What are some examples of bear markets?

All figures below were computed from daily closing prices published by FRED, the St. Louis Fed's database (S&P 500 data from S&P Dow Jones Indices). FRED holds only the last ten years of the S&P 500, so older episodes use the Nasdaq Composite, which FRED carries back to 1971.

2000-2002: the dot-com bust

The Nasdaq Composite, heavy in technology shares, closed at 5,048.62 on March 10, 2000. By October 9, 2002, it had fallen to 1,114.11, a loss of 77.9%. It did not close above the 2000 peak again until April 23, 2015, more than 15 years later. The story of how that bubble formed is told in our case file on the dot-com bubble.

2007-2009: the financial crisis

From October 31, 2007 to March 9, 2009, the Nasdaq Composite fell 55.6%. The fall came with a deep recession and a banking crisis, covered in our page on the 2008 financial crisis.

2020: the fastest fall in the data

The S&P 500 closed at a record 3,386.15 on February 19, 2020. As lockdowns spread, it fell to 2,237.40 on March 23, 2020, a drop of 33.9% in 23 trading days (33 calendar days). Its worst single day was March 16, 2020, when it lost 12.0%. By the 20% convention used by FINRA, the market entered bear territory within weeks. The whole decline took less time than the two-month period mentioned in the Investor.gov definition, which is why this site files 2020 as a crash as well as a bear market. The index was back above its February high on August 18, 2020. The full sequence is in our case file on the COVID stock market crash of 2020.

2022: a slow bear market driven by rates

The 2022 bear market moved differently. The S&P 500 peaked at 4,796.56 on January 3, 2022 and reached its low of 3,577.03 on October 12, 2022, a fall of 25.4% spread over more than nine months. It took until January 19, 2024 for the index to close above the old high of 4,796.56 set on January 3, 2022 (the close that day was 4,839.81). This was the year the Federal Reserve began raising rates to fight inflation after COVID: the effective federal funds rate averaged 0.20% in March 2022 and peaked at a monthly average of 5.33% in August 2023.

Near misses: 2018 and 2025

Two other declines in the FRED data came close without crossing the line on a closing basis. From September 20 to December 24, 2018, the S&P 500 fell 19.8%. From February 19 to April 8, 2025, it fell 18.9%. Under the 20% convention, both count as corrections. The gap between 19.8% and 20% is a reminder that the threshold is a convention.

What is a bear market rally?

A bear market rally is a rise in prices inside a bear market that fades, with the index then falling to a new low. These rallies can be large enough to look like the start of a recovery at the time.

The 2022 decline had a clear one. After falling to 3,666.77 on June 16, 2022, the S&P 500 climbed 17.4% to 4,305.20 on August 16, 2022. It then fell 16.9% to the year's final low of 3,577.03 on October 12. Anyone measuring only from June would have seen a strong rebound. Measured from January, the index was still deep in a bear market, and it went on to set a lower low.

FINRA describes a related term, the "dead cat bounce": a temporary spike in a stock's price after a major decline. The two ideas overlap. Neither can be identified with certainty until later prices show whether the low held.

Does a bear market mean a recession?

Not always. A bear market is a fall in stock prices; a recession is a broad fall in economic activity, dated in the US by the National Bureau of Economic Research (NBER). The two can overlap: the NBER dated the pandemic recession from a peak in February 2020 to a trough in April 2020, the same spring as the 2020 market fall. The 2022 bear market happened while US unemployment stayed low (it fell to 3.4% in April 2023, according to BLS data on FRED). Our page on what a recession is explains how recessions are dated.

What should investors do in a bear market?

We do not give investment advice, and the right answer depends on each person's goals, time horizon and circumstances. The SEC's investor education site, Investor.gov, is a good place to start for US readers; in the UK, the FCA and MoneyHelper publish similar guidance. Our editorial method explains how the figures on this site are computed and sourced.

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