Stocks are on the cusp of a bear market. Here's how long they last and how bad they can get

Published Mon, Mar 9 202010:05 AM EDT

The U.S. stock market moved closer to a bear market on Monday as investors continued to wallop equities as dismay over the expected economic impact of the coronavirus and a new oil fisticuffs between OPEC and Russia sent energy names spiraling. A bear market is defined as a 20% decline in one of the major U.S. stock indexes, typically the S & P 500 or Dow Jones Industrial Average, from a recent 52-week high close. Both indexes on Friday closed firmly in "corrections," a term investors use to denote a market decline in a range between 10% and 19.99%. Here's the historical round-up on bear markets, including how bad they get, on average, and typically how long they last. Both the Dow and S & P 500 opened sharply lower again on Monday, down 7.29% and 7%, respectively. The sell-off was so severe that it triggered a rare circuit breaker halt and stopped trading for 15 minutes. The nosedive put both the Dow and S & P 500 more than 18.5% off their respective 52-week highs and move the two most-cited indexes within striking distance of bear market territory. Though CNBC previously reported that the typical correction results in a 13% decline and takes about four months to recover to prior levels, breaking into bear market territory often spells a slower, more painful path ahead for stocks. The S & P 500 would have to trade below 2,714.82 and the Dow would have to trade below 23,654.86 on intraday bases to hit bear market territory. There have been 12 bear markets since World War II with an average decline of 32.5% as measured on a close-to-close basis. Bear markets have lasted 14.5 months on average and have taken two years to recover back to previous highs, on average. The most recent was October 2007 to March 2009, when the market dropped 57% and then took more than four years to recover. (The S & P 500 closed in a bear market in December 2018 using intraday data but not on a closing basis.) To be sure, those stats only apply if the market does, in fact, close in a bear market: If the market's losses are contained to a range between 10% and 20%, these figures about corrections still hold. There have been 27 market corrections (including the current one) since World War II with an average decline of 13.7% over an average of four months. Recoveries have taken four months on average. The most recent corrections occurred from September 2018 to December 2018. The S & P 500 bounced into and out of correction throughout the autumn of 2018 before plunging into a bear market (a 20% decline from its all-time high) on Christmas Eve. Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.

A bear market is defined as a 20% decline in one of the major U.S. stock indexes, typically the S&P 500 or Dow Jones Industrial Average, from a recent 52-week high close. Both indexes on Friday closed firmly in "corrections," a term investors use to denote a market decline in a range between 10% and 19.99%.

Here's the historical round-up on bear markets, including how bad they get, on average, and typically how long they last.