A correction is a fall of 10% or more from a recent peak. It is the conventional label for "a real drop, but not yet a bear market" — a bear market being the deeper 20%-or-more decline. The thresholds are pure convention, not physics, but they are the shared vocabulary everyone uses.
A pullback is a fall of roughly 5%, and is barely worth naming. A correction is 10% or more from the peak. A bear market is 20% or more. A crash has no formal definition but implies severity plus speed. All of these are measured from the most recent high, not from where you happened to buy — which is why a stock can be "in a correction" while you are still comfortably in profit.
Example (illustrative): an index peaks at 5,000. It falls to 4,700 — a 6% pullback, which nobody calls anything. It slides on to 4,480: that is 10.4% below the peak, and the headlines switch to "the market has entered correction territory." Note what changed between 4,510 and 4,480: nothing about the economy, the companies, or the outlook. Only a round number was crossed. The label is a reporting convention that arrived after the decline, and it carries no information the price chart did not already have.
It matters not because the number is meaningful but because PEOPLE react to it. The word "correction" appearing in headlines changes sentiment, which shows up in the Fear & Greed index and in the VIX, and can drive selling that has nothing to do with fundamentals — a feedback loop worth understanding. It is also a useful reality check for your own plan: corrections are a routine feature of equity investing, not an aberration, and a portfolio that cannot tolerate one was mis-sized before the decline started.
A correction gives you no information about the bottom. "We are down 10%, so it must be nearly over" is not a statement supported by anything — every bear market in history passed through the 10% mark on its way down, and looked exactly like an ordinary correction while doing so. It also says nothing about individual stocks: in a broad correction some names fall far more and some rise. If you want to know whether the underlying conditions are hostile or benign, read the market conditions and market breadth, not the depth of the drop. None of this is investment advice.
Depth, by convention only. A correction is a fall of 10% or more from a recent peak; a bear market is 20% or more. There is no structural difference at the 20% line — it is a naming threshold, not a change in the market's nature.
There is no reliable answer, and anyone offering a confident one is guessing. Some resolve in weeks; some deepen into bear markets that run for a year or more. The label tells you where price is, not where it is going.
That is a question about your own plan, horizon and risk capacity, and this page cannot answer it — nothing here is investment advice. What is worth knowing is that the 10% label itself carries no predictive information, so it is a poor reason to act on its own.
Browse all S&P 500 tickers to see this metric applied to individual companies.
Educational research only — not investment advice.