The Dow and S&P 500 both fell more than 20% from their recent highs Wednesday in light of coronavirus fears, but only the Dow closed the day officially in bear market territory.

The S&P 500 finished the day at 2,741, down about 5% for the session and about 19% below the all-time high it closed at on February 19.

The tech heavy Nasdaq is also 19% below its all-time high. Two other key market indexes, the Dow Jones Transportation Average and the small-cap focused Russell 2000, are already in a bear market.

And Thursday could be worse.

US stock futures plummeted after President Donald Trump used a national address on the coronavirus to announce a ban on most travel from Europe, but failed to deliver the comprehensive economic and medical response to the outbreak that investors are craving.

Dow futures plunged more than 1,000 points, or 4.6%. S&P 500 futures are down 4.3% and Nasdaq futures dropped 4.5%.

The S&P 500 was last in a bear market in late 2007, 2008 and early 2009 — during the height of the Great Recession and Global Financial Crisis. The index fell more than 56% from its peak before bottoming out.


A correction is Wall Street’s term for an index like the S&P 500, the Dow Jones Industrial Average, or even an individual stock, that’s fallen 10% or more from a recent high. A bear market occurs when the index or stock falls 20% or more from the peak for a sustained period of time.

Corrections are common during bull markets, and are considered normal and even healthy. They allow markets to remove speculative froth after a big run-up and give investors a chance to buy stocks at lower prices.

The major U.S. stock indexes entered a correction this month amid mounting fears about the impact that the coronavirus outbreak could have on the global economy and company earnings growth. A oil market price war this week that led analysts to lower their profit forecasts for energy companies fueled more selling on Wall Street.

The blue chip index is now only 33 points away from joining the Dow in bear status, given the recent bloodbath on Wall Street. It’s uncertain how long this market downturn will last — and how severe it will be.

In the last bear market before 2008, the burst of the tech stock crash/dotcom bubble of 2000-2002, the S&P 500 lost nearly half its value.

Still, not all bear markets last that long or have stocks plunge quite as much. That was the case in the early 1980s, when stocks fell a far more modest (by today’s standards) 27% between 1980 and 1982 due to sky-high inflation and rising interest rates. The Black Monday bear market of 1987 lasted only a few months.

There are hopes that the coronavirus outbreak will lead to only a temporary pullback in earnings and economic growth and that sales, profits and GDP will rebound by the end of the year. But it’s still too soon to say.

It’s also worth noting that a bear market does not have to necessarily lead to — or happen during — a recession. It’s the job of the National Bureau of Economic Research to determine when the economy is in recession — not the stock market, and certainly not stock market prognosticators.