The recent correction may be painful for ETF investors, but the pullback is not something out of the ordinary and is part of a small setback in a healthy stock market environment.
Goldman Sachs and CNBC analysts point out that the average correction for the S&P 500 since World War II lasted four months and saw equities slip 13% before bottoming, CNBC reports.
In contrast, the average bear market in the S&P 500 extended to 13.2 months and plunged 30%.
On Friday, the broad market index officially slipped into a correction and was 10.5% below the all-time intraday high on September 21, 2018. The benchmark also dipped into negative territory late-Monday after starting off on a positive note.
Meanwhile, the Dow Jones Industrial Average is over 8% off its own record high and fell more than 500 points Friday at its lows.
“It’s a bad sign that oversold markets not bouncing,” Michael Hartnett, Bank of America Merrill Lynch’s chief investment strategist, said. “The inability of oversold markets to bounce suggests investors worried by either systemic financial market event or recession.”
A correction is defined as a market down more than 10% from the high. Bear markets are defined as a 20% fall in stocks from their high.