Understanding Bear Markets: Definition and Impact

So, let’s get into this—over the weekend, President Trump’s 10% tariff that applies to all countries came into effect and boy, did the stocks react! Come Monday, April 7, we witnessed U.S. stocks plummeting by a solid 20%. Yep, you heard right—20%! This, folks, ushers us into what the economic pundits call a “bear market”.

Now, for those scratching their heads over what a ‘bear market’ might be, it’s just the polar opposite of a ‘bull market’. In essence, it denotes a prolonged period of falling stock prices, usually characterized by a 20% or more drop from recent highs. This isn’t going by any formal measure, of course, but it’s a pretty handy indicator in economic circles (Source: Dictionary.com).

Just when we thought we couldn’t possibly slide further, the previous Thursday—which was April 3 so that you’d know—our stocks had the worst day since the COVID-19 pandemic first bared its fangs in 2020. This was reported by none other than AFROTECH™. Beat this: Friday followed suit with yet another record fall.

But it doesn’t stop there—our good friend, the S&P 500 index (it keeps tabs on 500 big wigs in the U.S. market scene), plunged by over 4%. This marked a fall of over 16% from its peak. The smaller kid on the block, the Russell 2000 index, dropped by 5.3%. Our tech giant, the Nasdaq Composite index, already in a bear market, saw a decline of over 5% on Thursday, which counted as its worst trading session in more than half a decade.

Now, how’s that for a wild ride?! Despite all the doom and gloom, we must remember that markets are cyclical, they rise and fall, and as history has shown us, they always bounce back. Let’s keep the faith, peeps!