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A bear market occurs when stocks fall 20 percent from a recent peak. As global markets continue their meltdown, here’s what it means for your money and the economy.
- April 7, 2025, 10:19 a.m. ET
President Trump’s global tariffs have sent stock markets worldwide into a tailspin, and the S&P 500 on Monday entered bear market territory for the first time since 2022.
Mr. Trump has seemed unmoved by the decline. He signaled on Monday that he had no plans to back off on tariffs, insisting that they would bring in “billions of dollars” in revenue and that other countries had been “abusing” the United States with their trade policies.
Here is what to know about a bear market.
What is a bear market?
A bear market is a Wall Street term for a sustained market downturn, when a stock index falls 20 percent from its last peak.
The 20 percent threshold signals investor pessimism about the future of the economy.
Are we in a bear market now?
The S&P 500, the benchmark U.S. stock index, opened lower on Monday. The index was already down 17.4 percent from its last high, on Feb. 19, and if it closes Monday’s trading with a loss of at least 3.1 percent, that would tip it into a bear market.
Analysts at Morgan Stanley have warned that an even steeper drop is possible. Goldman Sachs on Monday slashed its forecast for economic growth, citing a growing risk of a U.S. recession next year.
The Nasdaq Composite Index, as well as the Russell 2000 index of smaller companies that are more vulnerable to the economic outlook, are already in a bear market.
