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What is a Market Correction? Business as Usual for the Stock Market

Keep calm.

The Dow Jones Industrial Average swung 1000 points on Friday and, by the end of the day, its value had increased enough to bring the Dow out of “market correction,” a term that describes when an index or market decreases at least 10 percent from a recent record trading high, generally as a means to constrain stocks from becoming overvalued.

This follows both the Dow and the Standard and Poor 500 both officially entering into market corrections twice this week, while the Nasdaq was just a few tenths of a percentage point — 9.7 percent — from entering into correction as well. Two weeks ago on January 26, the Dow had reached a record high, closing at 26,616 marks.

The Dow Jones reflects the overall stock prices of the performance of 30 large publicly listed companies, divided by the “Dow divisor”, a figure that takes into account stock splits, spinoffs, and other factors that would affect structure.

Is a Market Correction a Big Deal?

Market corrections signify that a decrease is more serious than just a temporary dip in prices — but despite what the onslaught of news coverage this week would suggest, market corrections are actually normal. After all, what goes up, must come down.

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Market corrections are not, in and of themselves, a huge cause for concern. They typically occur between every 12 to 24 months, but the stock market has been mostly on the rise since March 2009, after the 2008 financial crisis. In fact, the last market correction took place in February 2016, with 2017 being a remarkably stable year for the market. This means that a market correction was probably overdue, although investors may have become used to a seemingly new normal of market stability.

Here's how the stock market works. 

Besides, they don’t typically last long. John Prestbo at MarketWatch says that, according to his research, the average correction, a 13.3 percent decrease, lasts just 71.6 trading days, or about 14 calendar weeks.

What Contributes to a Market Correction?

Market corrections happen for a number of different reasons, and can be both unpredictable and not necessarily predictive of wider economic trends. This week’s volatility is partially the result of the latest jobs report in the United States, released February 2, which confirmed that wages are rising and that unemployment is low. This is great for the economy overall, but in the world of Wall Street, its raises fears of inflation. That in turn raises concerns that the Federal Reserve will increase interest rates to fight inflation.

And this did, in fact, happen, in the U.K. On Thursday, the Bank of England announced that it would be increasing interest rates, which contributed to the drop in trading prices.

Where Does This Leave Us?

What’s next? In all likelihood, the market will recover within the next four months. It may not return to quite the highs or the stability that we’ve gotten used to, but that might be a good thing, as it might mean less speculation.

And besides, the reason that the stock market is falling is actually because the U.S. economy is strong. Ironically, the correction is kind of the product of a good thing.

Steve Irwin: He Gave Attention to One of Nature's Saltiest Big Boys

The endangered saltwater crocodile received a helping hand from Irwin.

The late icon of conservation Steve “The Crocodile Hunter” Irwin would have been 57 years old on Friday, and Google chose the day to mark his extraordinary life with a touching Google Doodle slideshow. Irwin was deeply involved with animals, reptiles especially, from an early age, as his parents ran a reptile park when was a child in Australia.

Steve Irwin Is Still Protecting Animals Worldwide, 13 Years After His Death

The Crocodile Hunter's legacy lives on in thousands of acres of protected land.

In 2004, the late conservationist Steve Irwin caught a lot of heat for feeding a crocodile while simultaneously holding his baby. The incident captured his lifelong approach to animal conservation, which began with his animal-filled childhood and continues even after his death with the conservationist legacy he left behind. Irwin’s 57th birthday would have been on Friday, and he was commemorated with a front-page Google Doodle.

Steve Irwin: How He Rose to Fame as the Crocodile Hunter

Google paid tribute to the star.

Google commemorated the life of Steve Irwin on Friday with a homepage doodle on what would have been the Australian’s 57th birthday. Irwin became a household name through his animal activism and television appearances, first launching onto screens of Animal Planet viewers with his show The Crocodile Hunter.

Irwin was born in the Essendon near Melbourne in 1962 to parents Lyn and Bob Irwin. His parents famously gave him an 11-foot scrub python for his 6th birthday which he named Fred. The young Steve learned a lot from his parents about animals, and they laid the foundations for Beerwah Reptile Park when they bought some land in 1970. Steve learned to wrestle crocodiles from the age of 9, and helped manage the family-owned park. The park was renamed Queensland Reptile and Fauna Park, and in 1990, it was renamed Australia Zoo — the same year Steve met producer John Stainton. He met his future wife, Oregonian Terri Raines, when she was visiting the park the following year. Their croc-filled honeymoon in 1992 formed the first episode of The Crocodile Hunter.

Where to Get Every Game of Thrones Season on Blu-Ray and 4K Blu-Ray

Winter, uh, we mean the final season of this show is coming.

Where were you when Game Of Thrones first premiered on HBO in the summer of 2011? I was interning at a comedy website in New York, so naturally I was surrounded by the biggest nerds you have ever seen in your life, so naturally we all got together to watch the show together on Sunday nights. Wild to think that in the eight years prior, Ned Stark is long dead, Arya is now the most feared assassin in Westeros, and Varys… well, he’s still a real dick.

'You' Season 2: Netflix Release Date, Spoilers, Cast, Trailer, and Theories

Your latest Netflix obsession could be coming back soon.

It’s been over a month since Lifetime’s You made the jump to Netflix and became an overnight sensation. We’re already as obsessed with this series as Joe Goldberg (Penn Badgley) was over Guinevere Beck (Elizabeth Lail), and we can barely wait for the You Season 2 release date.

Thankfully, there’s already a lot of info out there about You Season 2, including a release date window, plot details, returning cast members, and a few new confirmed characters. Here’s everything you need to know, along with a bit of speculation.