(NEXSTAR) — U.S. stocks were swinging Monday following a manic morning — and significant losses last week — as a result of President Donald Trump’s implementation of tariffs on imported goods, which economists expect will raise prices for American consumers.
Trump has said he isn’t concerned about a sell-off, saying “sometimes you have to take medicine to fix something.” However, investors and everyday Americans are expressing fears of a recession — especially after Monday’s stock swings flirted with the threshold for a so-called “bear market.”
A “bear market” is a term used to describe a sustained stock market slump, but generally only after a major index — like the S&P 500 — falls 20% or more, according to the U.S. Securities and Exchange Commission (SEC). Most definitions say this downturn must be sustained, rather than a brief dip below 20%.
Bear markets can be caused by a number of factors, but are usually marked by pessimism among investors who don’t have confidence that a publicly traded company will continue to be profitable, or as profitable as it had been. These investors may then begin selling off their stocks, sparking a chain reaction of sell-offs that leads to a market downturn. (According to some theories, a downturn in the market is also where the term “bear market” comes from, as bears will swipe downward when attacking, whereas bulls — which represent upward-trending stock indexes — thrust their horns upward, Investopedia says of one possible explanation.)
During bear markets, investors may also be more conservative with their tactics or place their money elsewhere, like bonds. Others may be eager to “buy the dip,” meaning they’ll snap up devalued or undervalued stocks to sell if they rebound.
It’s hard to know how long a “bear market” can last, too. The last bear market, which began in January 2022, lasted for 282 days, according to Charles Schwab. However, the average (since WWII) is around 18.9 months, an S&P 500 and Dow Jones analyst told The New York Times this week.
It also takes an average of 27 months to get back to, not just an upturn, but a “breakeven” point, the Associated Press reported in 2022.
Trump, however, made no indication of easing up on the potential trade war that is fueling market uncertainty, saying on Monday that “GREATNESS” will be the end result of his economic plan. He also threatened an additional 50% tariff targeting goods from China, after Beijing had imposed their own tariffs on American imports (which itself was a response to Trump’s sweeping tariff announcement last week).
Even before Trump’s announcements on Monday, J.P. Morgan predicted the U.S. would enter a recession by the end of 2025. Hedge fund billionaire Bill Ackman — who supported Trump’s campaign — also suggested that the president’s plan was ill-conceived.
When markets crash, Ackman argued, “new investment stops, consumers stop spending money, and businesses have no choice but to curtail investment and fire workers,” he wrote on X.
He also believed Trump should call a “time out” to rethink his tariff plan.
“Alternatively, we are heading for a self-induced, economic nuclear winter, and we should start hunkering down,” Ackman wrote. “May cooler heads prevail.”
The Associated Press contributed to this report.