What is a market correction?

A correction is a sustained decline in the value of a market index or the price of an individual asset. A correction is generally agreed to be a 10% to 20% drop in value from a recent peak. Corrections can happen to the S&P 500, a commodity index or even shares of your favorite tech company.

What is a stock correction?

Here are answers to some commonly asked questions: What is a correction? There's no universally accepted definition of a correction, but most people consider a correction to have occurred when a major stock index, such as the S&P 500 ® index or Dow Jones Industrial Average, declines by more than 10% (but less than 20%) from its most recent peak.

Should a market correction be considered a healthy pullback?

When a stock market index rises steadily for an extended period, a market correction can be viewed as a healthy pullback before the market index continues its uptrend. It is because market corrections can help readjust the valuation of asset prices that have become unsustainably high.

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.