Market Correction

A market correction refers to a short-term decline in the price of a financial asset or market index, typically by 10% or more, following a period of rapid gains. Corrections are seen as a natural part of market cycles and can be triggered by changes in economic conditions, investor sentiment, or external shocks. While corrections can create temporary volatility, they are often viewed as opportunities to buy assets at lower prices.

Example

After several months of rapid gains, the stock market experiences a 12% decline, which analysts describe as a market correction due to profit-taking and economic uncertainty.