What Is a Stock Market Correction? How to Stay Calm When Stocks Drop 10%

A stock market correction is a decline of at least 10% — but less than 20% — from a recent peak. Corrections can feel alarming, but historically they have been a regular, even healthy, part of market cycles.

How Often Do Corrections Happen?

Over the long history of the S&P 500, corrections have occurred frequently — on average roughly once every year or two, though they come in clusters rather than on a schedule. Most have not turned into full bear markets.

What Causes Corrections?

Common triggers include worries about inflation, changes in interest rate expectations, disappointing earnings, geopolitical events or simply stretched valuations after a strong rally.

How to Respond

1. Don't panic. Selling after a 10% drop often means locking in losses just before a rebound.
2. Revisit your plan, not the headlines. If your goals and time horizon haven't changed, your strategy probably shouldn't either.
3. Keep contributing. Regular investing buys more shares at lower prices.
4. Rebalance if needed. A correction may leave you below your target stock allocation — an opportunity to buy.
5. Check your risk level. If a correction feels unbearable, read our guide to managing stock market risk.