A stock market slide that has already erased more than 3000 points from the Dow Jones Industrial continued Tuesday, with the Dow fall another 460 points at the market close.
But the speed at which the market has bounced up and down has left many investors spooked, especially those who have been lulled by a nearly nine-year-old bull market.
This is not a bear market yet.
Pullbacks and corrections are actually extremely common on Wall Street. Since the end of 1945, there have been 57 pullbacks (or about one every 1.3 years) and 21 corrections.
History says this is not likely to become a bear.
However, history says bear markets typically signal the onset of a recession—which doesn’t appear to be on the horizon right now.
“Bear markets are almost always caused by a decline in the real economy. That’s because it takes a recession to simultaneously damage both the valuations multiples and earnings growth of businesses, says Paul Eitelman, a strategist at Russell Investments. Right now, “this does not look like a recession scare to us.”
The economy itself remains strong
The market fundamentals remain healthy; corporate earnings to continue to see healthy growth in the months ahead, given current, solid economic data and new corporate tax cuts
Plus, real economic growth in the U.S. has grown at an annual rate faster than 3% for three straight quarters — something not seen since before the Great Recession.