{"id":629890,"date":"2024-08-05T18:09:56","date_gmt":"2024-08-05T15:09:56","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/what-is-a-stock-market-correction\/"},"modified":"2024-08-26T11:23:35","modified_gmt":"2024-08-26T08:23:35","slug":"what-is-a-stock-market-correction","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/what-is-a-stock-market-correction\/","title":{"rendered":"#What is a stock market correction?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2a88de3872d\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2a88de3872d\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/what-is-a-stock-market-correction\/#What_is_a_correction_and_what_causes_them\" >What is a correction and what causes them?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/what-is-a-stock-market-correction\/#Difference_between_a_correction_and_a_crash\" >Difference between a correction and a crash<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/what-is-a-stock-market-correction\/#Difference_between_a_correction_and_a_bear_market\" >Difference between a correction and a bear market<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/what-is-a-stock-market-correction\/#What_should_investors_do_during_a_correction\" >What should investors do during a correction?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/what-is-a-stock-market-correction\/#Bottom_line\" >Bottom line<\/a><\/li><\/ul><\/nav><\/div>\n<div>\n<figure class=\"caas-figure\">\n<div>\n<div>\n<div class=\"caas-img-container noheight\"><img decoding=\"async\" class=\"caas-img has-preview\" src=\"https:\/\/s.yimg.com\/ny\/api\/res\/1.2\/Fq6TXd0Pw_NJh_uNgQNqJw--\/YXBwaWQ9aGlnaGxhbmRlcjt3PTEyNDI-\/https:\/\/navi.cohesionapps.com\/partner?event=pageview&amp;write_key=wk_1NT28pl9mcyTc0an54g3qHgqeHb&amp;url=aHR0cHM6Ly93d3cuYmFua3JhdGUuY29tL2ludmVzdGluZy93aGF0LWlzLXN0b2NrLW1hcmtldC1jb3JyZWN0aW9uLw==&amp;referrer=aHR0cHM6Ly93d3cuYW9sc2hvcHBpbmcuY29t&amp;title=What%20is%20a%20stock%20market%20correction?&amp;businessContext=eyJjdXN0b21TdHJpbmcxIjogIntcImNhbXBhaWduXCI6IFwiYW9sLXN5bmQtZmVlZFwiLCBcIm1lZGl1bVwiOiBcInJzc1wifSJ9&amp;ua=0&amp;ip=0\" alt=\"\" \/><\/div>\n<\/div>\n<\/div>\n<\/figure>\n<p>After months of rapid growth in 2024, especially in the tech sector, concerns of a stock market correction are mounting. A slowing U.S. economy intensified selling pressure on the <a class=\"link rapid-noclick-resp\" href=\"https:\/\/www.bankrate.com\/investing\/what-is-nasdaq-composite\/?mf_ct_campaign=aol-synd-feed&amp;utm_content=syndication\" target=\"_blank\" rel=\"nofollow noopener\" data-i13n=\"cpos:1;pos:1\" data-ylk=\"slk:Nasdaq Composite index;cpos:1;pos:1;elm:context_link;itc:0;sec:content-canvas\">Nasdaq Composite index<\/a> on Aug. 2, driving it into correction territory. The index closed 10 percent below its recent peak.<\/p>\n<p>Weak numbers on employment and manufacturing sparked a market sell-off, raising concerns about <a class=\"link rapid-noclick-resp\" href=\"https:\/\/www.bankrate.com\/banking\/federal-reserve\/when-will-fed-cut-rates\/?mf_ct_campaign=aol-synd-feed&amp;utm_content=syndication\" target=\"_blank\" rel=\"nofollow noopener\" data-i13n=\"cpos:2;pos:1\" data-ylk=\"slk:whether the Federal Reserve has acted swiftly enough to cut interest rates;cpos:2;pos:1;elm:context_link;itc:0;sec:content-canvas\">whether the Federal Reserve has acted swiftly enough to cut interest rates<\/a>. Investors fear larger cuts may be necessary to stave off a U.S. recession.<\/p>\n<p>The Nasdaq Composite\u2019s decline of 10 percent in August from its peak marks the tech-heavy index\u2019s first correction since Jan. 19, 2022. That year proved to be dismal for both stocks and bonds, with the Nasdaq ultimately plunging 36 percent from its high.<\/p>\n<p>So what exactly is a stock market correction and what can you do about it? Here\u2019s what you need to know.<\/p>\n<h2 id=\"what-is-a-correction-and-what-causes-them\" class=\"caas-jump-link-heading\"><span class=\"ez-toc-section\" id=\"What_is_a_correction_and_what_causes_them\"><\/span>What is a correction and what causes them?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A correction is a decline of 10 percent or more from an asset\u2019s most recent high. For a stock that recently reached an all-time high of $100 per share, a correction would occur if the stock fell to $90 or lower.<\/p>\n<p>Corrections can h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>en in any financial asset such as individual stocks, broad market indexes like the S&amp;P 500 or commodities. The <a class=\"link rapid-noclick-resp\" href=\"https:\/\/www.bankrate.com\/investing\/what-is-sp-500\/?mf_ct_campaign=aol-synd-feed&amp;utm_content=syndication\" target=\"_blank\" rel=\"nofollow noopener\" data-i13n=\"cpos:3;pos:1\" data-ylk=\"slk:S&amp;P 500;cpos:3;pos:1;elm:context_link;itc:0;sec:content-canvas\">S&amp;P 500<\/a> fell below 4,336 in January 2022, marking a more than 10 percent decline from its high earlier in the year. At that point it fell into correction territory and then declined further throughout the year.<\/p>\n<p>Corrections can be caused by a number of different factors and they\u2019re difficult, if not impossible, to predict ahead of time. <a class=\"link rapid-noclick-resp\" href=\"https:\/\/www.bankrate.com\/investing\/what-makes-a-stock-go-up-in-price\/?mf_ct_campaign=aol-synd-feed&amp;utm_content=syndication\" target=\"_blank\" rel=\"nofollow noopener\" data-i13n=\"cpos:4;pos:1\" data-ylk=\"slk:Short-term concerns;cpos:4;pos:1;elm:context_link;itc:0;sec:content-canvas\">Short-term concerns<\/a> about economic growth, Federal Reserve policy, political issues or even a pandemic all have the potential to trigger market corrections. These issues make investors fearful that their prior assumptions about the future might not be correct. When people are fearful, they typically look to sell stocks in favor of assets considered safer such as U.S. Treasury bonds.<\/p>\n<h2 id=\"difference-between-a-correction-and-a-crash\" class=\"caas-jump-link-heading\"><span class=\"ez-toc-section\" id=\"Difference_between_a_correction_and_a_crash\"><\/span>Difference between a correction and a crash<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A stock market correction may sound similar to a crash, but there are some key distinctions between the two.<\/p>\n<p>A crash is a sharp drop in share prices, typically a double-digit percentage decline, over the course of just a few days. A correction tends to happen at a slower pace, therefore making the drop less steep than a crash would be. One of the most famous stock market crashes happened in October 1987, when the Dow Jones Industrial Average fell 22.6 percent in a single day that became historically known as Black Monday.<\/p>\n<p>Corrections are more subtle and are sometimes even thought to be healthy for rising markets because they help things from becoming overheated. Like their name suggests, they correct prices back down from an elevated level.<\/p>\n<h2 id=\"difference-between-a-correction-and-a-bear-market\" class=\"caas-jump-link-heading\"><span class=\"ez-toc-section\" id=\"Difference_between_a_correction_and_a_bear_market\"><\/span>Difference between a correction and a bear market<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The difference between a correction and a <a class=\"link rapid-noclick-resp\" href=\"https:\/\/www.bankrate.com\/investing\/what-it-means-bullish-bearish\/?mf_ct_campaign=aol-synd-feed&amp;utm_content=syndication\" target=\"_blank\" rel=\"nofollow noopener\" data-i13n=\"cpos:5;pos:1\" data-ylk=\"slk:bear market;cpos:5;pos:1;elm:context_link;itc:0;sec:content-canvas\">bear market<\/a> is in the magnitude of the decline. A correction is a decline of at least 10 percent, but less than 20 percent, while a bear market begins at a decline of at least 20 percent from a recent peak. Bear markets also tend to last longer than corrections because they tend to reflect an economic reality, such as a recession, rather than a short-term concern that may or may not materialize.<\/p>\n<p>The challenge for investors is that it\u2019s very difficult to determine in real time whether a market is just in a correction or if it could become a bear market.<\/p>\n<h2 id=\"what-should-investors-do-during-a-correction\" class=\"caas-jump-link-heading\"><span class=\"ez-toc-section\" id=\"What_should_investors_do_during_a_correction\"><\/span>What should investors do during a correction?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>For most people, the answer will probably be nothing. Corrections are to be expected as part of a long investing life and a short-term decline of about 10 percent isn\u2019t much when you compare it to the return you\u2019re likely to earn over decades. Trying to shift out of the market when you anticipate a correction is not a wise strategy because you\u2019re likely to predict more corrections than actually occur. However, there are some ways to take advantage of corrections.<\/p>\n<p>If you participate in a workplace retirement plan such as a <a class=\"link rapid-noclick-resp\" href=\"https:\/\/www.bankrate.com\/retirement\/401k-plan-smart-moves-to-make\/?mf_ct_campaign=aol-synd-feed&amp;utm_content=syndication\" target=\"_blank\" rel=\"nofollow noopener\" data-i13n=\"cpos:6;pos:1\" data-ylk=\"slk:401(k);cpos:6;pos:1;elm:context_link;itc:0;sec:content-canvas\">401(k)<\/a> or make regular contributions to an <a class=\"link rapid-noclick-resp\" href=\"https:\/\/www.bankrate.com\/investing\/what-is-an-ira\/?mf_ct_campaign=aol-synd-feed&amp;utm_content=syndication\" target=\"_blank\" rel=\"nofollow noopener\" data-i13n=\"cpos:7;pos:1\" data-ylk=\"slk:IRA;cpos:7;pos:1;elm:context_link;itc:0;sec:content-canvas\">IRA<\/a>, the purchases you make during market corrections will earn higher returns than those made at higher prices. This approach is known as <a class=\"link rapid-noclick-resp\" href=\"https:\/\/www.bankrate.com\/investing\/dollar-cost-averaging-what-it-is-avoids-timing-market\/?mf_ct_campaign=aol-synd-feed&amp;utm_content=syndication\" target=\"_blank\" rel=\"nofollow noopener\" data-i13n=\"cpos:8;pos:1\" data-ylk=\"slk:dollar-cost averaging;cpos:8;pos:1;elm:context_link;itc:0;sec:content-canvas\">dollar-cost averaging<\/a> and will help you take advantage of short-term declines.<\/p>\n<p>If you happen to have extra cash available to invest, corrections can be a good time to put it to work because prices are more attractive. But be careful not to wait too long to invest or you might find yourself paying higher prices than if you\u2019d consistently bought along the way.<\/p>\n<h2 id=\"bottom-line\" class=\"caas-jump-link-heading\"><span class=\"ez-toc-section\" id=\"Bottom_line\"><\/span>Bottom line<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Stock market corrections happen occasionally, but long-term investors shouldn\u2019t be overly concerned about them. Keep your focus on achieving your <a class=\"link rapid-noclick-resp\" href=\"https:\/\/www.bankrate.com\/banking\/what-is-a-financial-plan\/?mf_ct_campaign=aol-synd-feed&amp;utm_content=syndication\" target=\"_blank\" rel=\"nofollow noopener\" data-i13n=\"cpos:9;pos:1\" data-ylk=\"slk:financial goals;cpos:9;pos:1;elm:context_link;itc:0;sec:content-canvas\">financial goals<\/a> and try to take advantage of the decline in prices through consistent investing in your retirement accounts. Stocks are volatile, but that\u2019s why they\u2019re part of your long-term goals and not your near-term needs.<\/p>\n<p><em>\u2014 Bankrate\u2019s <\/em><a class=\"link rapid-noclick-resp\" href=\"https:\/\/www.bankrate.com\/authors\/rachel-christian\/?mf_ct_campaign=aol-synd-feed&amp;utm_content=syndication\" target=\"_blank\" rel=\"nofollow noopener\" data-i13n=\"cpos:10;pos:1\" data-ylk=\"slk:Rachel Christian;cpos:10;pos:1;elm:context_link;itc:0;sec:content-canvas\"><em>Rachel Christian<\/em><\/a><em> contributed to an update of this story.<\/em><\/p>\n<p>Related article : <a href=\"https:\/\/goatacademy.org\/coaching\/\" target=\"_blank\" rel=\"noopener\">Options Mentoring+<\/a><\/p>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on <span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMN63nwsw68G3Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/www.aol.com\/finance\/stock-market-correction-150956903.html\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>After months of rapid growth in 2024, especially in the tech sector, concerns of a stock market correction are mounting. A slowing U.S. economy intensified selling pressure on the Nasdaq Composite index on Aug. 2, driving it into correction territory. The index closed 10 percent below its recent peak. Weak numbers on employment and manufacturing&#8230;<\/p>\n","protected":false},"author":1,"featured_media":629891,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/s.yimg.com\/ny\/api\/res\/1.2\/sAn1gLK5r2PPeWFYVXHR2w--\/YXBwaWQ9aGlnaGxhbmRlcjt3PTEyMDA7aD02NzU-\/https:\/\/media.zenfs.com\/en\/aol_bankrate_605\/a79fea027e984d71cd974b933c94a6e6","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[151407,151406,151405],"class_list":["post-629890","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-bear-market","tag-financial-goals","tag-options-mentoring"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/629890","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=629890"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/629890\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/629891"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=629890"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=629890"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=629890"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}