Wall Street could be headed for a bear market. Here's what that means

The possibility of another bear market looms over Wall Street as the Trump administration’s aggressive tariff strategy sparks concerns about the potential negative impact on the global economy.

The most recent bear market occurred in 2022; however, the current situation has resemblances to the abrupt and turbulent bear market of 2020. During that time, the S&P 500 index plummeted by 34% over just one month, marking the shortest bear market on record.

Here are some common questions about bear markets:

Why is it called a bear market?

A bear market is declared when major indices like the S&P 500 or the Dow Jones Industrial Average drop by 20% or more from recent highs and remain at that level for an extended period.

Why use a bear to refer to a market slump? Bears hibernate, so they represent a stock market that’s retreating. In contrast, Wall Street’s nickname for a surging market is a bull market, because bulls charge.

The S&P 500, Wall Street’s main barometer of health, was down 1.2% in Monday afternoon trading. It’s now 18.4% below the all-time high it set on Feb. 19.

The Dow industrials fell 1.8%, and the tech-heavy Nasdaq composite, which already was in a bear market, dropped 0.9%.

The most recent bear market for the S&P 500 ran from Jan. 3 to Oct. 12 in 2022.

What’s bothering investors?

The trade war has ratcheted up fear and uncertainty on Wall Street over how businesses and consumers will respond.

President Donald Trump followed through on tariff threats last week by declaring a 10% baseline tax on imports from all countries and higher tariff rates on dozens of nations that run trade surpluses with the United States.

Global markets cratered the next day, and the sell-off deepened after China announced it would retaliate with tariffs equal to the ones from the U.S.

Tariffs cause economic pain in part because they’re a tax paid by importers that often gets passed along to consumers, adding to inflationary pressure. They also provoke trading partners into retaliating, which can hurt all economies involved.

Import taxes can also cause economic damage by complicating the decisions businesses have to make, including which suppliers to use, where to locate factories and what prices to charge. And that uncertainty can cause them to delay or cancel investments that help drive economic growth.

The tariffs come at a time when the U.S. economy is already showing signs of slowing. Markets are also worried that tariffs could fuel inflation, which recently ticked higher.

How long do bear markets last and how deep do they go?

On average, bear markets have taken 13 months to go from peak to trough and 27 months to get back to breakeven since World War II. The S&P 500 index has fallen an average of 33% during bear markets in that time. The biggest decline since 1945 occurred in the 2007-2009 bear market, when the S&P 500 fell 57%.

History shows that the faster an index enters into a bear market, the shallower they tend to be. Historically, stocks have taken 251 days (8.3 months) to fall into a bear market. When the S&P 500 has fallen 20% at a faster clip, the index has averaged a loss of 28%.

The longest bear market lasted 61 months and ended in March 1942. It cut the index by 60%.

When is a bear market over?

Generally, investors look for a 20% gain from a low point as well as sustained gains over at least a six-month period. It took less than three weeks for stocks to rise 20% from their low in March 2020.

Should investors sell now?

If you need the money now or want to lock in the losses, yes. Otherwise, many advisers suggest riding through the ups and downs while remembering the swings are the price of admission for the stronger returns that stocks have provided over the long term.

While dumping stocks would stop the bleeding, it would also prevent any potential gains. Many of the best days for Wall Street have occurred either during a bear market or just after one ended. That includes two separate days in the middle of the 2007-2009 bear market when the S&P 500 surged roughly 11%, as well as leaps of better than 9% during and shortly after the monthlong 2020 bear market.

Advisers suggest putting money into stocks only if it will not be needed for several years. The S&P 500 has come back from every one of its prior bear markets to eventually rise to another all-time high.

The down decade for the stock market following the 2000 bursting of the dot-com bubble was a notoriously brutal stretch, but stocks have often been able to regain their highs within a few years.

___

Veiga reported from Los Angeles.

Copyright © 2025 by The Associated Press. All Rights Reserved.

You May Also Like
Chicago Pride Bowl LGBTQ+ flag football tournament held at Montrose Beach, presented by Metropolitan Sports Association, Bears

Metropolitan Sports Association Bears presents LGBTQ+ flag football tournament at Montrose Beach in Chicago for Chicago Pride Bowl

CHICAGO (WLS) — During Pride weekend in Chicago, the city hosted one…
Philadelphia explosion: 1 dead, 2 hurt in North Philadelphia fire and explosion that leveled or damaged multiple homes

Tragedy in North Philadelphia: 1 person killed, 2 injured in fiery explosion that destroyed multiple homes

PHILADELPHIA — Reports indicate that a large explosion in North Philadelphia has…
Russia launches the biggest aerial attack since the start of the war, Ukraine says

Ukraine reports Russia launches largest airstrike of the war

KYIV, Ukraine — Russia carried out its largest aerial assault on Ukraine…
Todd and Julie Chrisley Break Silence After Trump Pardons: “God Touched President Trump’s Heart”

Todd and Julie Chrisley Speak Out After Trump Grants Pardons: “Trump was Influenced by God”

Todd and Julie Chrisley are no longer behind bars — and they’re…
Dave Parker death: Baseball Hall of Fame outfielder known as 'the Cobra,' dies at 74 after Parkinson's disease: Pittsburgh Pirates

Baseball Hall of Famer ‘the Cobra,’ Dave Parker, passes away at 74 after battle with Parkinson’s disease

PITTSBURGH — Dave Parker, a hard-hitting outfielder who was set to be…
Stunning reason why mother gave marijuana edibles to 6-year-old daughter

Surprising explanation for why a mother provided cannabis-infused treats to her 6-year-old child

Deanna Sue Woods, 36, was sentenced to prison on Wednesday after allegedly…
2 arrested at LA home linked to Iranian 'human smuggling hub': CBP

CBP: Two people arrested at Los Angeles residence tied to Iranian ‘human smuggling center’

NEWYou can now listen to Fox News articles! Federal officials apprehended two…
In Simple, Stark Terms, Trump Lays Out Why the SCOTUS Ruling on Universal Injunctions Was So Critical

Trump Explains Why SCOTUS’s Decision on Universal Injunctions Was Extremely Important in Basic Words

While President Donald Trump may not have a legal background, he has…
Lizzo puts Ozempic results on full display in tiny swimsuit after coming clean about weight loss aid

Lizzo proudly shows off her results from using Ozempic in a small swimsuit after being honest about using it for weight loss.

Lizzo proudly displayed her reduced frame on Friday – a week after she…
Americans at risk 'anywhere' after 6 illegal immigrants are charged in mother's murder: congressman

American citizens may be in danger ‘anywhere’ following the charges of six illegal immigrants in a mother’s murder, warns congressman

NEWYou can now listen to Fox News articles! Discussing the recent tragic…
Eric Trump drops big time hint about possible successor to father's presidency in 2028

Eric Trump hints at potential 2028 presidential successor

Donald Trump’s second son has sparked rumors concerning his family’s interest in…
The party's finally over! Newlyweds Jeff Bezos and Lauren Sanchez depart their Venice hotel as they wave goodbye to A-list guests after three-day wedding extravaganza

Newlyweds Jeff Bezos and Lauren Sanchez bid farewell to guests after their three-day wedding celebration in Venice

Jeff Bezos and Lauren Sanchez departed from their Venice hotel after their…