7 Characteristics of a down stock market
1. People are losing their jobs
The government tracks people being hired or fired. If there are several consecutive reports where people lose their jobs then the stock market will be reacting.
2. The market goes down several days or weeks in a row
Every day the stock market ends in the red.
3. The biggest names in the market are down
Google, Apple, Microsoft, Berkshire Hathaway, Johnson and Johnson. When these stocks are significantly off their 52 week highs then the majority of stocks are down.
4. 20% off stock market highs
Workers are constantly investing into the market via their retirement accounts. A constant stream of money into the markets. But there are other big players in the stock market. Banks, companies, hedge funds, family funds etc. When these people sell it can drive down the market in a big way.
5. A big bad event happens
1999, 2001, 2008, 2020
A large scale bad event can immediately drag the entire market down.
6. Slowing growth
When the national GDP numbers slow down so does the market. China after the pandemic. Japan for decades. Up and coming countries.
7. High interest rates
High interest rates mean that investors can get a better return from government bonds and banks rather than investing into the stock market. This drives down the price of stocks.