posted on 06-06-2019

Market Swoon

Updated August 7, 2020

What is a Market Swoon?

A market swoon is an abrupt fall in the value of a market index.

How Does a Market Swoon Work?

Derived from a term meaning "to faint" or "pass out," market swoon is a vernacular expression that describes a sudden and widespread loss in the value of stocks across an entire market.

A market swoon is generally characterized by a substantial interruption in trading combined with a high trading volume. An example of a market swoon would be a steep decline in the value of the S&P 500 Index.

Why Does a Market Swoon Matter?

Market swoons frequently occur in response to economic or political shocks (for example, interest rate increases and international conflicts). The market often recovers from a market swoon in a relatively short span of time.