The S&P 500 (SPX) has entered a correction, leaving investors wondering: How long will the downturn last, and when can we expect a recovery? Historical data provides key insights into what could come next for the U.S. stock market.
Understanding the Current Market Correction
The S&P 500 hit an all-time high on February 19, 2025, but since then, the market has entered a correction phase. If this follows the median correction pattern seen over the past century, investors can expect a total decline of 13.6% before the market bottoms out. Based on historical trends:
- The correction is likely to reach its low point around May 17, with the S&P 500 dropping to 5,309.
- A recovery to previous highs would then take nearly four months, bringing the market back to new record levels by September 11.
Correction vs. Bear Market: What’s the Difference?
Corrections are typically short-lived downturns of 10%-20%, while bear markets involve a decline of more than 20% from the peak. Based on historical data since 1928:
- 60% of corrections do not turn into bear markets.
- The average correction lasts just over three months before rebounding.
However, if this downturn extends into a full-fledged bear market, the scenario changes dramatically.
What If This Becomes a Bear Market?
If the current correction turns into a bear market, history suggests a median decline of 32.7%, which would mean:
- A prolonged downtrend lasting until November 7, 2025.
- The S&P 500 dropping an additional 25.1% beyond its current losses.
- A full recovery taking until July 25, 2027, before the market reaches new highs.
Past Market Corrections: A Range of Outcomes
While the median correction follows a predictable pattern, past downturns have varied widely in duration and severity:
| Correction Type | Shortest Duration | Longest Duration | Shallowest Drop | Deepest Drop |
|---|---|---|---|---|
| Standard Correction | 13 days | 531 days | -10.1% | -19.9% |
| Bear Market | 261 days (median) | Over a year | -20%+ | -50%+ |
What This Means for Investors
The next two months could be critical in determining whether this downturn remains a typical correction or morphs into a bear market. Investors should closely monitor key levels and historical trends while keeping an eye on economic indicators and Federal Reserve policies that could influence market sentiment.
