What Happens When Stock Markets Become Bears

The S&P 500 on Monday dropped into its second bear market of the pandemic, crossing a symbolic and worrisome threshold as stocks plunge following a meteoric rise over the last two years.

Bear markets — when stocks decline at least 20 percent from their recent peaks — are relatively rare, and they frequently precede a recession. This sell-off, dragging the S&P down from a peak on Jan. 3 (which reflects the new bear market’s starting point), comes as concerns mount over high inflation, the war in Ukraine, Covid and the Federal Reserve’s attempts to rein in the economy.