What is a stock market correction?

A stock market correction is a significant decline in the value of the stock market, typically defined as a drop of 10% or more from a recent high. It is a normal and healthy part of the stock market cycle and occurs when investors become concerned about economic conditions or when valuations have become too high.
Stock market corrections are different from bear markets, which are defined as a decline of 20% or more in stock prices from a recent high and typically last for a longer period of time. A correction is generally a shorter-term event and a normal part of the market's ups and downs.
Corrections can be caused by a variety of factors, such as economic downturns, rising interest rates, geopolitical tensions, or unexpected events. They can also occur as a result of a market that has risen too quickly, and investors start to take profits, leading to a decline in prices.
During a correction, investors may become anxious and may sell their stocks, which can lead to further declines in the market. However, it is important to keep in mind that corrections are a normal part of the market cycle and that they can provide opportunities to buy quality stocks at lower prices.
It's also important to note that corrections are not always predictable, and they can happen at any time. In addition, they don't always lead to bear markets. Many corrections have been short-lived and the market has quickly recovered.
In summary, a stock market correction is a significant decline in the value of the stock market, typically defined as a drop of 10% or more from a recent high. It is a normal and healthy part of the stock market cycle and occurs when investors become concerned about economic conditions or when valuations have become too high. They can be caused by a variety of factors and don't always lead to bear markets. They also provide opportunities to buy quality stocks at lower prices.