A bear market refers to a period in the stock market when prices fall sharply, typically by 20% or more from recent highs. It often reflects negative investor sentiment and broader economic concerns like inflation, rising interest rates, or a slowing economy.
What Is Bear Market Territory?
When financial experts say a market has entered bear market territory, it means stock indices—like the S&P 500 or NASDAQ—have dropped 20% or more from their peak levels. This signals a major shift in market mood, where fear overtakes optimism.
What Is a Bear Market in Stocks?
In simple terms, a bear market in stocks happens when the value of shares declines significantly over a period of time. Investors may pull back from buying, and many choose to sell off risky assets. It can lead to a slowdown in the economy as companies lose market value.
Why Is It Called a Bear Market?
The term comes from how a bear attacks its prey—swiping downward. This is symbolic of falling prices. In contrast, a bull market symbolizes rising prices, like a bull’s horns going upward.A bear market can feel scary, but it’s a natural part of the economic cycle. Knowing what it means helps investors stay calm and make smarter decisions during uncertain times.