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Bear market vs correction: what 10% and 20% drops mean

Pullback, correction and bear market are market conventions, not official rulings. This guide explains the 5%, 10% and 20% lines, how drops are measured on closing prices and what Ned Davis Research data on 27 S&P 500 bear markets shows.

By Rowan Ashby Published 23.10.26 18:19 UTC 10 min read

Bear market vs correction: what 10% and 20% drops mean — Unknown /

Key takeaways

A pullback is usually a fall of 5% to 10% from a recent closing high, a correction is 10% to just under 20%, and a bear market is 20% or more. These are market conventions. No exchange or regulator declares them.
The drop is normally measured on closing prices, from the highest close to the lowest close that follows. The SEC's Investor.gov glossary adds that a bear market generally lasts at least two months.
Ned Davis Research counts 27 S&P 500 bear markets from 1929 through 2024. Data published by Hartford Funds put the average fall at 35.24% and the average length at 289 days.
Capital Group data for 1954–2024 show that declines of 10% or more came about once every 18 months, while declines of 20% or more came about once every six years.
October 2026 has examples at every level. As of the October 22 close, China's CSI 300 was in a bear market (about -20.2%), Nvidia was in a correction (-11.3%), the Nasdaq Composite was in pullback territory (about -5.8%), and the S&P 500 was about 2% below its record.

Bear market vs correction comes down to size: a correction is a fall of 10% to just under 20% from a closing high, while a bear market is a fall of 20% or more. A drop of 5% to 10% is usually called a pullback.

That is the short answer to the "bear market vs correction" question. The labels are conventions. They only describe how far prices have already fallen, and they say nothing about what happens next. This guide explains how the thresholds are measured, what the historical record shows, and where the main indexes in the news stand after this month's AI-led selloff.

Bear market vs correction: the 5%, 10% and 20% conventions

Market professionals use three common thresholds for falling prices. Each is measured from the most recent peak, not from the start of the year and not from the purchase price.

Common labels for stock market declines
Label	Decline from recent closing high	How sources describe it
Pullback (or dip)	About 5% to 10%	Capital Group counts declines of 5% or more as a separate category.
Correction	10% to 19.9%	Hartford Funds, citing Ned Davis Research: "a 10%–19.9% drop".
Bear market	20% or more	Investor.gov (SEC): a broad index falls 20% or more, generally over at least two months.
New bull market	Rise of 20% from the low	Hartford Funds, citing Ned Davis Research.

Sources: Investor.gov glossary; Hartford Funds, "10 Things You Should Know About Bear Markets" (Ned Davis Research data); Capital Group, "Market declines — a little history".

The SEC's investor education site, Investor.gov, describes a bear market as a time when stock prices are falling and sentiment is pessimistic. It says a bear market "generally" occurs when a broad market index falls by 20% or more over at least a two-month period. That last condition matters. A very fast crash can cross 20% in a few weeks, and data providers do not always agree on how to classify it.

Investor.gov does not set a single official figure for a correction, and neither does any exchange. The 10% mark is a widely used rule of thumb. Ned Davis Research, whose data Hartford Funds publishes, defines a correction as a drop of 10% to 19.9%. In this guide, "pullback" means a fall of 5% to 10%. That label is used even more loosely.

How a market drawdown is measured

A drawdown is the percentage fall from a peak to a later low. The standard calculation for an index is:

Drawdown = (current close ÷ highest previous close) − 1

Take the S&P 500 as an example. It set a record close of 7,818.93 on October 6, 2026. On October 22 it closed at 7,663.43, according to the Associated Press. The drawdown was 7,663.43 ÷ 7,818.93 − 1, or about −2.0%. That is not even a pullback.

Four details often cause confusion:

Closing prices, not intraday prices. Most counts, including Ned Davis Research's, use closing levels. An index can briefly trade 20% below its peak during a session and still not be counted as a bear market if it closes above that line.
The peak keeps moving. A correction is measured from the most recent record or high close. If the index recovers and sets a new high, any later fall is measured from that new peak.
Price indexes exclude dividends. The headline S&P 500 is a price index, so drawdown figures quoted in the news usually leave out dividends.
Different methods give different counts. Capital Group treats a decline as over only after the index has regained half of what it lost. Ned Davis Research starts a new bull market after a 20% rise from the low. As a result, the two firms count episodes differently, and their averages are not directly comparable.

How long corrections and bear markets have lasted

The most widely cited long-run figures come from Ned Davis Research. Hartford Funds republished them in its guide "10 Things You Should Know About Bear Markets", with data through 2024 and some figures as of March 31, 2025. They show:

27 S&P 500 bear markets and 28 bull markets since 1928.
An average bear-market fall of 35.24% and an average length of 289 days, or about 9.6 months.
An average bull-market gain of about 112% and an average length of 988 days, or about 2.7 years.
About one bear market every 3.5 years over the whole period. The pace was 12 in 1928–1945 and 15 since 1945, or about one every 5.1 years after the Second World War.

The table below lists the S&P 500 bear markets since 1973 in the Ned Davis Research data.

S&P 500 bear markets since 1973 (closing basis)
Peak	Trough	Decline	Days
Jan 11, 1973	Oct 3, 1974	−48.20%	630
Nov 28, 1980	Aug 12, 1982	−27.11%	622
Aug 25, 1987	Dec 4, 1987	−33.51%	101
Mar 24, 2000	Sep 21, 2001	−36.77%	546
Jan 4, 2002	Oct 9, 2002	−33.75%	278
Oct 9, 2007	Nov 20, 2008	−51.93%	408
Jan 6, 2009	Mar 9, 2009	−27.62%	62
Feb 19, 2020	Mar 23, 2020	−33.92%	33
Jan 3, 2022	Oct 12, 2022	−25.43%	282
Average, all 27 since 1929		−35.24%	289

Source: Ned Davis Research via Hartford Funds; table data as of December 2024. Ned Davis Research splits 2000–2002 and 2007–2009 into separate episodes because of interim rallies of 20% or more. Other providers treat each as a single bear market, which is why counts vary.

The two longest recent bear markets lasted well over a year. The fastest, in 2020, took 33 days from peak to trough. The 2020 and 2009 episodes also show why Investor.gov's "at least two months" condition is described as general guidance rather than a firm rule.

How often 5%, 10% and 20% declines happen

Capital Group, using data from RIMES and Standard & Poor's for 1954–2024, measures how often each size of decline occurs and how long it takes to reach the low.

S&P 500 declines, 1954–2024
Size of decline	Average frequency	Average length (high to low)	Last occurrence (to end-2024)
5% or more	About twice a year	46 days	July 2024
10% or more	About once every 18 months	135 days	July 2023
15% or more	About once every three years	256 days	August 2022
20% or more	About once every six years	402 days	January 2022

Source: Capital Group, data as of December 31, 2024. Average frequency assumes a 50% recovery of lost value before a new decline is counted.

Two patterns stand out. First, pullbacks are routine, at roughly two a year. Second, most declines stop short of 20%, since 10% declines happen about four times as often as 20% declines. The 2025 tariff selloff shows how close the line can be. CNBC reported that on April 8, 2025, the S&P 500 closed at 4,982.77, nearly 19% below its February record. The index then rebounded without closing in a bear market.

What typically drives corrections and bear markets

No single cause explains every decline. The historical record does, however, point to a few recurring themes:

Recessions and falling profits. The deepest declines in the table above, in 1973–74, 2000–02 and 2007–09, overlapped with US recessions dated by the National Bureau of Economic Research (NBER). Not every bear market came with a recession, though. Hartford Funds counts 15 recessions since 1928, compared with 27 bear markets.
Interest rates and inflation. The 2022 bear market came as the Federal Reserve raised rates quickly to fight inflation. Higher rates reduce the present value of future profits, which tends to hit expensive growth stocks hardest.
Valuation and crowded themes. The 2000–02 decline followed the dot-com boom. When a market's gains are concentrated in a few richly valued stocks, a change in sentiment about those stocks can drag down the whole index.
Shocks. The 1987 crash and the 2020 pandemic selloff were both very fast. In 2025, tariff announcements nearly pushed the S&P 500 into a bear market.

2026 examples: CSI 300, Nasdaq, Nvidia and KOSPI

The selloff in AI-linked stocks in October 2026 shows each label at work at the same time.

Where key markets stood after the October 22, 2026 close
Market	Close	Reference high	Drawdown	Label	Data as of (UTC)
CSI 300 (China)	4,036.30	June 22, 2026 peak	about −20.2%	Bear market	2026-10-22 07:00
Nvidia (NVDA)	$212.21	$239.24 (Oct 6)	−11.3%	Correction	2026-10-22 20:00
Nasdaq Composite	26,008.86	about 27,599.9 (Oct 6)	about −5.8%	Pullback	2026-10-22 20:00
S&P 500	7,663.43	7,818.93 (Oct 6)	about −2.0%	Below 5% threshold	2026-10-22 20:00

Sources: CSI 300 drawdown from Finimize and CNBC, close from Trading Economics and Investing.com. Nvidia from Gotrade and The Motley Fool. Nasdaq and S&P 500 closes from the Associated Press. Record closes from Swingfolio and Wikipedia's closing-milestones lists, which differ by 0.10 point on the Nasdaq record. Drawdowns for the Nasdaq and S&P 500 are calculated by Bullquill from those closes.

CSI 300: a bear market

China's benchmark closed about 20.2% below its June 22 peak on October 22, after ten straight weeks of losses, according to Finimize and CNBC, which cited LSEG data. Our report on why the CSI 300 entered a bear market covers the reported drivers: doubts about AI spending, Brent crude above $112 a barrel, and limited new policy support.

Nvidia: a correction

Nvidia closed at $212.21 on October 22, 11.3% below its October 6 record close of $239.24. Individual stocks are measured on the same 10% and 20% scale. Because Nvidia is the largest stock in the S&P 500 by market value, its moves carry extra weight for the index. See our analysis of the Nvidia stock correction.

Nasdaq Composite: a pullback

The Nasdaq fell 2.6% on October 22 to 26,008.86, its steepest daily drop since early June, according to Reuters. That left the index about 5.8% below its October 6 record, inside pullback territory and well short of a correction. Our report on the Nasdaq's 2.6% fall has the full details, and the US stocks daily brief for October 22 covers the session.

KOSPI: a correction debate

South Korea's KOSPI dropped about 3% in early trade on October 23, led by Samsung Electronics and SK Hynix, according to Yahoo Finance data and Bloomberg. On October 19, Bloomberg reported that President Lee Jae Myung said a correction was inevitable after the index's rally. Bullquill has not verified the KOSPI's exact peak-to-trough drawdown from an exchange source, so this guide does not assign it a label. See our report on the KOSPI's 3% drop.

What it means

The difference between a bear market and a correction is a matter of size: 10% versus 20% from a recent closing high. Neither label is a forecast. History shows that most 10% declines did not become bear markets, but some did. The Capital Group data above show 10% declines occurring about four times as often as 20% declines. Bear markets have varied widely, from a 33-day crash in 2020 to declines lasting more than 600 days in the 1970s and early 1980s. Track Asian and global markets on our markets dashboard.

For readers following markets, the more useful questions are what the measurement is based on (closing high, price index, which date), and what is driving the fall: earnings, interest rates, valuations or a one-off shock. The October 2026 examples show that the same selloff can produce a bear market in one index, a correction in a single stock and only a modest pullback in another index. That depends on how much each one had risen beforehand and how concentrated it is in the sectors under pressure.

Frequently asked questions

What is the difference between a correction and a bear market?

Both measure a fall from a recent closing high. A correction is a decline of 10% to just under 20%; a bear market is a decline of 20% or more. The SEC's Investor.gov adds that a bear market generally lasts at least two months. Neither label is declared by an exchange or regulator.

How long do bear markets last on average?

Ned Davis Research data published by Hartford Funds put the average S&P 500 bear market since 1929 at 289 days, with an average fall of 35.24%. Capital Group, using a different method for 1954–2024, puts the average time from high to low for 20%-plus declines at 402 days.

Is the CSI 300 in a bear market?

Yes. China's CSI 300 closed about 20.2% below its June 22, 2026 peak on October 22, 2026, after ten straight weekly losses, according to Finimize and CNBC. That crosses the conventional 20% bear-market threshold.

Is the US stock market in a correction in October 2026?

Not on the broad index as of October 22, 2026. The S&P 500 closed at 7,663.43, about 2% below its October 6 record of 7,818.93. The Nasdaq Composite was about 5.8% below its record, which is pullback territory, while Nvidia was 11.3% below its record close, which is a correction.