Do corrections mark the start of a bear market?

Nobody can predict with any degree of certainty whether a correction will reverse or turn into a bear market (that is, periods when the market is down by 20% or more). However, historically most corrections haven’t become bear markets. There have been 24 market corrections since November 1974, and only five of them became bear markets (which began in 1980, 1987, 2000, 2007, and 2020).

Since 1974, only five market corrections have become bear markets

Source: Schwab Center for Financial Research with data provided by Morningstar, Inc. Each period listed represents the beginning month/year of either a market correction or a bear market. The general definition of a market correction is a market decline that is more than 10%, but less than 20%. A bear market is usually defined as a decline of 20% or greater. The market is represented by the S&P 500 index. Past performance is no guarantee of future results.