Now, some economists predict a recession is coming.
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By definition, Ryan Sweet, the senior director of economic research at Moody's Analytics, says a recession is two consecutive quarters of a contraction in economic activity, and the results of a recession won't look good.
He says they create a domino effect broadly across almost every industry.
"When people see their neighbors losing their jobs they panic and run to the bunker and pull back spending. Unfortunately, that leads to fewer sales at your mom-and-pop stores and your restaurants. That leads to more layoffs," said Sweet.
A variety of factors are playing into this, but inflation seems to be the catalyst.
"It's costing the average household $460 additional per month to buy the same goods and services this year as they did last year," said Sweet.
But he says he has an optimistic outlook.
"If we do have a recession, it's going to be mild. There are not a lot of imbalances in the economy," said Sweet.
Mark Luschini, with the Philadelphia-based financial institution Janney Montgomery Scott, says it looks like the economy is going to operate in a positive fashion.
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The Federal Reserve is poised to raise interest rates Wednesday and that'll constrict the nation's money supply with the goal of tamping down the record inflation, said Luschini.
So he's telling his clients, while stock prices and bond prices are low historically, it's proven times like these are a good time to buy.
"Take advantage of these lower prices. This is an opportune time to continue to commit money evenly and frequently," said Luschini.
WHY IS IT CALLED A BEAR MARKET?
A bear market is a term used by Wall Street when an index like the S&P 500, the Dow Jones Industrial Average, or even an individual stock, has fallen 20% or more from a recent high for a sustained period of time.
Why use a bear to represent a market slump? Bears hibernate, so bears represent a market that's retreating, said Sam Stovall, chief investment strategist at CFRA. In contrast, Wall Street's nickname for a surging stock market is a bull market, because bulls charge, Stovall said.
The S&P 500, Wall Street's main barometer of health, slid 3.9% Monday. The index fell an additional 0.5% as of midday Tuesday and is 22.2% below its record set early this year and now in a bear market.
The Dow industrials sank 2.8% Monday and the tech-heavy Nasdaq composite, which already was in a bear market, tumbled 4.7%.
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The most recent bear market for the S&P 500 ran from February 19, 2020 through March 23, 2020. The index fell 34% in that one-month period, the shortest bear market ever.
HOW LONG DO BEAR MARKETS LAST AND HOW DEEP DO THEY GO?
On average, bear markets have taken 13 months to go from peak to trough and 27 months to get back to breakeven since World War II. The S&P 500 index has fallen an average of 33% during bear markets in that time. The biggest decline since 1945 occurred in the 2007-2009 bear market when the S&P 500 fell 57%.
History shows that the faster an index enters into a bear market, the shallower they tend to be. Historically, stocks have taken 251 days (8.3 months) to fall into a bear market. When the S&P 500 has fallen 20% at a faster clip, the index has averaged a loss of 28%.
The longest bear market lasted 61 months and ended in March 1942. It cut the index by 60%.
HOW DO WE KNOW WHEN A BEAR MARKET HAS ENDED?
Generally, investors look for a 20% gain from a low point as well as sustained gains over at least a six-month period. It took less than three weeks for stocks to rise 20% from their low in March 2020.
The Associated Press contributed to this report.