What is a market correction? Stock market corrections explained with 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 market correction is a fall of at least 10% in a stock index, a stock or another asset from its recent high. A fall that reaches 20% or more in a broad index is usually called a bear market instead, so a stock market correction is the band between those two lines.

What is the definition of a market correction?

FINRA, the self-regulatory body for US brokers, defines it this way in its glossary of terms for stressed markets: "A correction is when stocks, bonds, commodities or indices reverse course by at least 10 percent before resuming their previous upward or downward trend." It adds that the word can technically describe a 10% rise as well as a 10% fall, but it is usually used for a drop in prices.

The 10% figure is a convention. No regulator or exchange declares a correction, and the label is normally applied to closing prices after the fact. The SEC's investor education site, Investor.gov, does not have a glossary entry for corrections; its definition of a bear market (a fall of 20% or more in a broad market index over at least two months) sets the upper limit that most writers use.

Correction vs bear market: what is the difference?

Every bear market starts as a correction, since an index has to pass -10% on its way to -20%. Most corrections stop before that point. The difference only becomes clear once the low is in.

How many stock market corrections has the S&P 500 had recently?

We computed the figures below from the S&P 500 daily closes published by FRED, the St. Louis Fed's database, on October 6, 2026. FRED holds the last ten years of the index (October 6, 2016 to October 5, 2026). We counted every decline of at least 10% from a recent closing high to the following closing low, before the index rose 10% from that low.

The 2022 bear market also contained swings that were corrections in their own right. From January 3 to March 8, 2022, the index fell 13.0%. After a rebound, it fell 20.8% from March 29 to June 16, and after another rally it fell 16.9% from August 16 to October 12. That is how a bear market often looks in daily data: a series of drops and partial recoveries.

Early 2018: fast and shallow

The first correction in the data took nine trading days. The S&P 500 fell from 2,872.87 on January 26, 2018 to 2,581.00 on February 8, 2018. It was back above the January high on August 24, 2018.

Late 2018: close to the line

From September 20 to December 24, 2018, the index fell 19.8% over 65 trading days, a little short of the 20% that would have made it a bear market on a closing basis. It closed above its September high again on April 23, 2019.

2023: a correction during a recovery

Between July 31 and October 27, 2023, the S&P 500 fell 10.3% while it was still below its January 2022 record. It recovered the July level on December 1, 2023.

2025: the deepest correction in the data

From a record close on February 19, 2025, the index fell 18.9% to April 8, 2025. The rebound that followed included the largest one-day gain in the ten-year FRED series, +9.5% on April 9, 2025. The index closed above the February record on June 27, 2025.

What causes a market correction?

There is no single cause, and many corrections are only explained after the fact. Corrections in the data above came at times of rising interest rates, as in 2022, and in a sudden economic shock, as in 2020. For the bigger falls and what lay behind them, see our list of stock market crashes and the case file on the 2020 crash.

What should investors do during a correction?

We explain market history and do not give investment advice. What makes sense depends on each person's goals, time horizon and situation. The SEC's Investor.gov is the place to start for US readers, and the FCA and MoneyHelper for UK readers. How we compute our figures is described in our editorial method.

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