The S&P 500 entered “bear market” territory on Monday as stock prices fell sharply. What is a bear market, and what does this mean for the economy at large?

Bear markets occur when stock prices fall more than 20% from recent highs, and they often coincide with recessions. The S&P 500 index, which measures 500 of the largest U.S. companies, also briefly dipped into bear market territory in May. Analysts generally agree that investors’ fears about inflation — and the interest rate hikes used by the Federal Reserve to fight inflation — are driving current stock trends. On Monday, investors were caught between Friday’s hot inflation report and an expected 0.75% interest rate hike at the Fed’s Wednesday meeting. 

Monday’s selloff impacted stock exchanges in Asia and Europe as well. The cryptocurrency market also dove to new lows, leading crypto exchange CoinDesk to lay off 1,100 employees. While a bear market is bad news for stock investors, analysts appeared divided on how much damage it would do to the rest of the economy. 

Coverage was widespread and generally balanced across the spectrum on Tuesday, particularly in business-focused outlets. “Bear” themes were common in economic reporting, including images of bears and taglines like “Poking the Bear.” While some commentators raised fears of a recession, others stressed that the bear market was only temporary.