A bear market is typically defined as a decline of 20% or more from a recent peak. The benchmark is usually a broad market index, such as the S&P 500, rather than one individual stock.
The 20% threshold is a widely used convention, not a physical law. Analysts generally measure the fall from a closing high to a later closing low, and the decline often reflects sustained pessimism about economic growth, corporate earnings, interest rates, or financial stability. A market can enter bear-market territory before the final low is known, because the classification is based on the size of the decline.
A drop of 10% is commonly called a correction, while a decline of 20% or more is generally called a bear market. The terms do not predict how long the downturn will last: some bear markets are brief, while others persist for years. A bear market also differs from a bear-market rally, which is a temporary rebound during a broader decline.