A market correction is a rapid change in the nominal price of a commodity, after a barrier to free trade has been removed and the free market establishes a new equilibrium price. It may also refer to several of these single-commodity corrections en masse, as a collective effect over several markets concurrently.
Stock Market CorrectionEdit
A "stock market correction" refers to a 10% pullback in the value of a stock index. Corrections end once stocks attain new highs. Stock market corrections are typically measured retrospectively from recent highs to their lowest closing price. The recovery period can be measured from the lowest closing price to new highs (trough to recovery). Gains of 10% from the low is an alternative definition of the exit of a correction.
Declines of 20% or more are classified as a bear market.
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- Times, The New York (2020-02-27). "What Is a Stock Market Correction?". The New York Times. ISSN 0362-4331. Retrieved 2020-03-18.
- DeCambre, Mark. "Stop saying the Dow is moving in and out of correction! That is not how stock-market moves work". MarketWatch. Retrieved 2020-03-18.
- "Stock Market Corrections: Not As Scary As You Think". Wealthfront Blog. 2018-05-11. Retrieved 2020-03-18.