New York – The US stock market has just fallen by 10% of its high set last month, affected by concerns about the economy and a global commercial war.
T Fall in love with the SANDP 500 It is steep enough for Wall Street to have a name: a “correction.” These drops have happened regularly for more than a century, and market professionals often see them as potentially healthy eliminatories of exaggerated euphoria, which could send the prices of the actions too high if they are not controlled.
But the corrections are terrifying at the time, particularly for each new generation of investors who enter the market at a time when it seems that the shares only increase.
The sANDP 500 is coming out two consecutive years with profits of more than 20%. Such star profits left the market too expensive for critics, who pointed out how prices rose faster than corporate profits.
Extracting too much enthusiasm among daytime merchants is one thing. The biggest fear always accompanying a correction is that it could be a warning sign of an upcoming “bears market”, which is what Wall Street calls a fall of at least 20%.
Here is a look at what history shows about past corrections and what market observers expect in the future.
Initially the US stock market. He jumped after the election of President Donald Trump In November, hoping to generate lower taxes, less regulation for companies and other policies that would generate higher corporate profits. All these profits have disappeared since thenWhile Wall Street faces the possible disadvantages of Trump’s White House for the economy.
The president has been doing Ads on rates at a vertiginous rhythmFirst placing them in commercial partners, then exempting some and then doing everything again. Tariffs could affect all countries that quote with the United States, which would raise the prices of US households and companies when high inflation has already proven to be completely stubborn.
The fear is that tariffs can stop or stop the solid growth that the US economy was showing when it ended 2024. Even if Trump finally advances with less painful tariffs, all uncertainty around the will or will not work could be harmful due to freezing economic activity. Such concerns have appeared in the last readings about consumer confidence, as well as the forecasts of companies for future profits.
Trump himself has recognized that his plans could affect the growth of the US economy.
All uncertainty is also doing things more complicated for the Federal Reservethat had been reducing interest rates after obtaining inflation almost to its 2%target. Further reducing rates would help the economy, but could also exert upward pressure on inflation.
The worst part of this mass sale has also reached the stocks that critics say that the most expensive were seen after running wildly through frenzy around artificial intelligence. Nvidia, for example, has already fallen by approximately 14% in 2025 so far after increasing more than 800% to 2023 and 2024.
Most of the other great actions in the “Magnificent Seven” who have dominated the market recently have also been delaying the rest of the SANDP 500. Those seven actions alone had represented more than half of the SANDThe total return of P 500 last year.
Every two years, on average. Even during the historic bull of almost 11 years for US actions from March 2009 to February 2020, the SANDP 500 stumbled to five corrections, according to CFRA. Concerns above all, from interest rates to commercial wars and a European debt crisis caused the setbacks.
The last correction of the US market was in 2023, when the SANDP 500 fell 10.3% from the end of July to October. At that time, the high yields of the treasure were undermining the prices of the actions, since the merchants accepted a new normality in which the Fed would keep the fees for a while. But the actions would increase rapidly as optimism revived that the cuts to the rates were on the horizon.
The last correction that graduated in a bearish market was in 2022. It was then that the Fed began to increase interest rates to combat the worst inflation in generations. The concerns increased that high rates would slow down the economy enough to create a recession, one that finally never arrived.
Through the 2022 bears market, the SANDP 500 fell 25.4% from January 3 to October 12.
Looking only the corrections since 1946 that managed to straighten before becoming a bearish market, the SANDP 500 has taken an average of 133 days to get to the bottom and lost an average of almost 14% on the road, according to CFER. The index has taken an average of 113 days to recover its losses.
For the decrease that becomes bearish markets, the damage is much worse. Returning to 1929, the average bears market has taken an average of almost 19 months to reach the bottom and has caused a loss of 38.5% for the SANDP 500, according to SANDPow Jones Indices.
On paper, an investor can lose most of his money. From the end of 1929 to mid -1932, the stock market fell a little more than 86%, for example.
A bearish market can also feel endless: one lasted more than five years, from 1937 to 1942, where US actions lost 60%, according to SANDPow Jones Indices.
In Japan, after the Nikkei 225 index established a record at the end of 1989, it sank and then took decades to recover completely. It was not until 2024 that he returned to that peak.
However, the Japanese example is an atypical case. In almost all cases, investors would have recovered all their losses of a recession for US actions if they were simply maintained and not sold. That includes the Bust 2000 Dot-Com, the financial crisis of 2008 and the collapse of Coronavirus 2020.
No one knows. Some investors in Wall Street say that they expect Trump to go back some policies if they prove to be too harmful, while others say that uncertainty alone is creating enough pain.
The economy has given signs that it is still relatively solid at this time, including the job report last month, but the prospects are more cloudy than all the unknowns.
