What is a stock market correction?
The S&P 500 has generally taken nearly a year to regain its pre-correction peak
Charles Schwab chief investment strategist Liz Ann Sonders discusses investing strategies as the market slumps amid coronavirus concerns.
During stock market swings like those in the early stages of the COVID-19 pandemic, the term "correction" is tossed around frequently.
It's not just another synonym for a decline.
A correction occurs when a security falls 10 percent or more from its most recent peak. Corrections can occur in stock-market indexes, single stocks, commodities and all other types of financial instruments. A drop that exceeds 20 percent is considered a bear market.
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Going back to 1928, the benchmark S&P 500 has experienced 65 corrections, according to Dow Jones Market Data.
Corrections have no set duration as their length depends on a number of factors including the economy and decisions specific to a company or industry.
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The average correction has lasted 51 trading days, with a decline as large as 14.4 percent at its trough, Dow Jones Market Data showed. The S&P 500, a widely-followed gauge of U.S. equities, has taken an average of 316 days to return to its previous peak after experiencing one.