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Bear Market

What is a Bear Market?

A bear market occurs when the stock market declines and investors are pessimistic about investing. If stocks fall at least 20% over two months or longer, it is often considered a bear market.

Because market segments perform differently, some spaces could enter bear market territory while others don’t. For instance, say the Russell 2000 Index declines over 20%, but the Russell 1000 Index doesn’t. In that case, small-cap stocks could be experiencing a bear market while large-cap stocks aren’t.

A bear market is often conflated with other terms describing the market or economy faring poorly. A recession is generally when gross domestic product declines for two consecutive quarters. A pullback is considered a short-term decline in price within a grander scheme of price increase. A market crash is a drastic market decline over a few days, while a depression is a long-term recession that can last multiple years.

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