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The violent plunge in the stock market this past week stoked fears of a bear market.
So far the market is merely in a correction, with the Standard & Poor’s 500 index down about 8 percent this year and 11 percent from its 2015 peak.
On Friday,the Dow Jones industrial average closed down 391 points, down 2.39 percent. The S&P fell 2.16 percent, and the Nasdaq composite index sank 2.7 percent.
The stock market’s plunge since the start of 2016 is the worst ever during the first two weeks of a new year, fueling concerns that the market is heading into bear market territory. Bear markets are when stocks drop at least 20 percent and stay down for months.
So far this year the plunge in the stock market has been stunning.
The Wilshire 5000, which measures essentially the entire U.S. stock market of large and small stocks, has fallen about 7 percent. About $1.6 trillion has been lost this year.
Many stock markets around the world have fallen 20 percent from recent highs.
In other words, if you look at your 401(k) mutual funds or stocks or funds in your IRA, it’s not going to be pretty.