A market correction is often defined as a 10 percent pullback from a recent peak. Using that as a yardstick, after yesterday's stock market plunge, the S&P 500 is about 2 percentage points away from joining the Nasdaq Composite in correction mode.
But a correction doesn’t necessarily mean that a bear market is lurking around the corner. In fact, history and data make for a strong case that this recent selloff is nothing out of the norm. Data from the Schwab Center for Financial Research showed that there have been 22 market corrections since 1974 and only four of them, occurring in 1980, 1987, 2000 and 2007, eventually ended up as bear markets.
Even in the current bull market. which started in 2009, there have been six corrections that avoided turning into bears. Most recently, a dive in February was followed by stocks getting back to record territory by late summer.
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