What is a bear market? A fall of 20%, and Japan’s Nikkei just had one

A bear market is a fall of 20% or more in a share index from its last high, measured from closing price to closing price. It is the opposite of a bull market, a rise of 20% or more from a low. On 6 November 2026 Japan’s Nikkei 225 entered one: it closed at 57,434.77, 20.6% below its record of 72,366.34 on 25 June, Nikkei’s own index data show.

The term has no legal standing. No exchange or regulator declares a bear market, and no rule changes when one starts. It is a convention that analysts, index providers and the press share, and it is useful because it puts a size on a fall: 20% is far more than the ups and downs of a normal year.

What counts as a bear market

The count starts at the highest close before the fall, the peak, and runs to the lowest close after it, the trough. If the trough is 20% or more below the peak, the whole stretch is a bear market. The trough is only known once prices have recovered, so a bear market’s end is always dated after the fact.

Three details matter in practice:

• Closing prices, not prices during the day. An index that dips 20% below its high in the middle of a session but closes above that line has not entered a bear market.
• The index, not the stocks in it. Single shares often fall 20% while the index holds up. A bear market in the index means the broad market has fallen, not a few companies.
• The local currency. The Nikkei’s fall is measured in yen. For a dollar investor the loss depends on the exchange rate as well.

Bear market vs correction

A correction is a smaller fall: 10% or more from a high, but less than 20%. The Nasdaq composite, full of chip and AI shares, entered one on 5 November. It fell 5.5% that day to 24,315.00, 11.9% below its record, the Associated Press reported. The record was 27,599.89, set on 6 October, FRED’s Nasdaq data show.

Most corrections stop before 20%. A correction says a market has had a hard fall. A bear market says the fall has gone far enough to be counted with the big ones in the history books, and that list is short.

How many bear markets has the S&P 500 had?

The S&P 500 has had 13 bear markets since 1946, according to tables kept by Yardeni Research. That is about one every six years. The 2022 fall, which ended on 12 October 2022, was the last. Six of the 13 ended in October, a pattern we looked at on 5 October.

S&P 500 bear markets since 1946: fall from peak to trough, %. Source: Yardeni Research, from S&P 500 closing prices. Each bar is one bear market, labelled by the year of its peak. A bear market is a fall of 20% or more.

1946	26.6
1948	20.6
1957	20.7
1961	28.0
1966	22.2
1968	36.1
1973	48.2
1980	27.1
1987	33.5
2000	49.1
2007	56.8 (the deepest)
2020	33.9
2022	25.4

Source: Yardeni Research, from S&P 500 closing prices. Each bar is one bear market, labelled by the year of its peak. A bear market is a fall of 20% or more.The Macro Notebook

The falls differ a lot. The two shallowest, in 1948–49 and 1957, barely passed the line, at 20.6% and 20.7%. The deepest, from October 2007 to March 2009, took 56.8% off the index, during the global financial crisis. The 2000–02 fall, after the dot-com boom, took 49.1%, and the 1973–74 fall, in the oil shock, took 48.2%. On average the 13 bear markets since 1946 took 32.9% off the S&P 500; the middle one took 28.0%.

How long do bear markets last?

The middle bear market since 1946 lasted 282 days from peak to trough, a little over nine months, Yardeni’s tables show. The average is 361 days, pulled up by a few long ones.

• The shortest was the pandemic fall of 2020: 33 days, from 19 February to 23 March, for a loss of 33.9%.
• The longest ran from March 2000 to October 2002: 929 days.
• The 1987 crash was over in 101 days, from 25 August to 4 December, with a loss of 33.5%.

Length and depth do not move together. The 2020 bear market was one of the fastest and still deeper than average. The 1948–49 one lasted almost a year and only just counted.

Bear market vs bull market

A bull market is the rise between two bear markets, measured from a trough to the next peak. Bull markets have lasted much longer than bear markets. The longest in Yardeni’s tables ran from 4 December 1987 to 24 March 2000, 4,494 days, and the index rose 582.1%. The one from March 2009 to February 2020 gained 400.5% over 3,999 days.

That imbalance is why long-run investors in shares have come out ahead despite the falls: the S&P 500 has spent most of the past 80 years rising. It is also why a bear market matters most to people who must sell during one, such as someone retiring or a fund that has to pay out.

Are we in a bear market?

It depends on the market, at the close of 6 November 2026:

• Japan: yes. The Nikkei 225 fell 6.0% on 6 November, after 1.8% the day before, and closed 20.6% below its June record, Nikkei’s data show.
• The Nasdaq: a correction. It was 11.9% below its October record at the close on 5 November.
• The S&P 500: neither. It closed at 7,353.73 on 5 November after falling 4.4%, its worst day since April 2025, the AP reported. That is 6.0% below its record close of 7,818.93 on 6 October, FRED’s S&P 500 series shows.

The sell-off began with chip and AI shares after the US midterm elections, as we reported on 5 November, and spread to Tokyo the next day. Whether the S&P 500 follows the Nikkei will be clear only from the closes to come, and the end of any bear market only once it is over.