In stock markets, a market correction is a 10% drop in the value of a

stock index In finance, a stock index, or stock market index, is an index that measures the performance of a stock market, or of a subset of a stock market. It helps investors compare current stock price levels with past prices to calculate market perform ...

. Corrections end once stocks attain new highs. Stock market corrections are typically measured retrospectively from recent highs to their lowest closing price and are sharper and steeper than bear markets. The recovery period can be measured from the lowest closing price to new highs, to recovery. Gains of 10% from the low is an alternative definition of the exit of a correction. A sustained drop of 20% is not a correction, but a

bear market A market trend is a perceived tendency of the financial markets to move in a particular direction over time. Analysts classify these trends as ''secular'' for long time-frames, ''primary'' for medium time-frames, and ''secondary'' for short time ...

. A correction may also be a drop in a commodity price, as in the 2000s United States housing market correction.

References

Financial markets Financial economics Investment Behavioral finance Capitalism {{finance-stub