What is a market correction?

A market correction is by definition a drop of less than 20%. Between the time when the market enters the "correction territory" of a more-than-10% decline and when it stops falling, you won't know if it's "just" a correction, or a more serious market crash -- usually defined as a rapid market drop of more than 20%.

What is a stock market correction?

A sell-off pushed the S&P 500 to correction territory, a threshold that signals investors have turned pessimistic about stocks. After rising through much of the pandemic, the stock market has tumbled in recent weeks.

What does a 'correction' mean?

What does a "correction" mean, what's likely to happen next and what can investors do now? When a stock index falls more than 10% from a recent high, it is often said to have entered "correction" territory. That's a fairly neutral term for what can be an unpleasant experience to many investors.