Financial Markets

Below are selected entries from a topical guide published by The Associated Press.

bear market: A period of generally declining stock prices over a prolonged period, generally defined as a 20% or larger decline in broad stock indexes such as the S&P 500.

bull market: A period of generally rising stock prices over a prolonged period, generally defined as a 20% or larger increase in broad stock indexes such as the S&P 500.

correction: A correction happens when a stock, bond, commodity, or index declines 10% from a recent peak. Most market watchers wait until the market has closed for the day before declaring that an index or other measure has officially entered a correction. Corrections are common during bull markets, and are considered normal and even healthy. They allow markets to remove speculative froth after a big run-up and give investors a chance to buy stocks at lower prices.

cost of living: The amount of money needed to pay taxes and to buy the goods and services deemed necessary to make up a given standard of living, taking into account changes that may occur in tastes and buying patterns.

The term often is treated incorrectly as a synonym for the U.S. Consumer Price Index, which does not take taxes into account and measures only price changes, keeping the quantities constant over time.

Hyphenate when used as a compound modifier: The cost of living went up, but he did not receive a cost-of-living raise.

crash: While there's no standard definition, a crash can be a sudden, dramatic decline in stock, bond, or commodities prices, as in 1987. A crash can also occur over a longer period, with a succession of sharp declines, as in the market crash of 1929. Market declines in crashes are faster and deeper than in corrections. In spring of 2020 the price of oil crashed as the COVID-19 pandemic sapped demand and producers failed to sufficiently rein in production, leading to an oversupply of crude.

Dow Jones Industrial Average: The market indicator comprises 30 leading U.S. stocks. The average is calculated and published by S&P Dow Jones Indices LLC, which is jointly owned by S&P Global Inc. and CME Group Inc. The average is maintained by S&P Dow Jones Indices' averages committee, comprising representatives of S&P Dow Jones Indices and The Wall Street Journal. Always use the full name on first reference in stories. On subsequent references, use the Dow. The Dow is also acceptable in summaries and headlines.

e-commerce: Use a hyphen in all e- words except email and esports: e-book, e-reader, e-commerce.

Federal Reserve: The central bank of the United States. It comprises the Federal Open Market Committee, which sets interest rates; the Federal Reserve Board, the regulatory body made up of Fed governors in Washington; and the Federal Reserve System, which includes the Fed in Washington and 12 regional Fed banks. Use Federal Reserve on first reference, the Fed on second reference.

furlough versus layoff (n.) lay off (v.): When workers are furloughed, they are let go by an employer but are considered on a leave of absence and sometimes remain eligible for benefits such as health insurance. Employees who are laid off are considered permanently let go. Both categories of workers are eligible for unemployment benefits.

Great Recession: The recession that began in December 2007 and became the longest and deepest since the Great Depression of the 1930s. It occurred after losses on subprime mortgages battered the U.S. housing market and financial system. The National Bureau of Economic Research said it officially ended in June 2009, having lasted 18 months.

gross domestic product: A common measure of economic growth, reflecting the total value of goods and services produced in a country. Economists often refer to the GDP. Spell it out on first reference and define it in the story for clarity.

inflation: A sustained increase in prices. The result is a decrease in the purchasing power of money. There are two basic types of inflation:

— Cost-push inflation occurs when increases in the price of specific items, such as oil or food, are big enough to drive up prices overall.

— Demand-pull inflation occurs when the amount of money available exceeds the amount of goods and services available for sale.

National Bureau of Economic Research: A nonprofit research organization. Its Business Cycle Dating Committee monitors the U.S. business cycle for economic activity to identify recessions and expansions after the fact, based on economic data. That means there is not an official declaration of recession while it is happening.

Nasdaq composite: A major U.S. stock index, often referred to in conjunction with the Dow Jones Industrial Average and the S&P 500 index. The Nasdaq composite is an index of all the stocks listed on the Nasdaq Stock Market. On second reference: the Nasdaq.

Nasdaq Stock Market: The world's first all-electronic stock market and a direct competitor to the New York Stock Exchange. Parent company is Nasdaq Inc.

percent, percentage, percentage points: Use the % sign when paired with a numeral, with no space, in most cases: The S&P 500 future contract was down 3.2% and the future for the Dow dropped 3.3%.

In casual uses, use words rather than figures and numbers: She said he has a zero percent chance of winning.

At the start of a sentence: Try to avoid this construction. If it's necessary to start a sentence with a percentage, spell out both: Eighty-nine percent of sentences don't have to begin with a number.

Constructions with the % sign take a singular verb when standing alone or when a singular word follows an of construction: The teacher said 60% was a failing grade. He said 50% of the membership was there.

It takes a plural verb when a plural word follows an of construction: He said 50% of the members were there.

Use decimals, not fractions, in percentages: Her mortgage rate is 4.5%.

For a range, 12% to 15%, 12%-15% and between 12% and 15% are all acceptable.

Use percentage, rather than percent, when not paired with a number: The percentage of people agreeing is small.

Be careful not to confuse percent with percentage point. A change from 10% to 13% is a rise of 3 percentage points. This is not equal to a 3% change; rather, it's a 30% increase.

Usage: Republicans passed a 0.25 percentage point tax cut. Not: Republicans passed a 0.25 percentage points tax cut or Republicans passed a tax cut of 0.25 of a percentage point.

prime rate: A benchmark rate used by banks to set interest charges on a variety of corporate and consumer loans, including some adjustable home mortgages, revolving credit cards and business loans extended to their most creditworthy customers. Banks almost always raise or lower their rates by a similar amount on the same day Federal Reserve policymakers change their target for overnight loans between banks, known as the federal funds rate.

producer price index: An index of changes in wholesale prices, produced by the Bureau of Labor Statistics, U.S. Department of Labor, and used as a gauge of inflation. Spell the index name lowercase.

recession, depression: A recession is a falling-off of economic activity that may be a temporary phenomenon or could continue into a depression. A common definition is two straight quarters of economic contraction. A more official determination is made by the National Bureau of Economic Research, which considers a range of indicators in declaring a recession. The bureau's determination is typically made well after a recession has begun and sometimes after it has ended.

There is no agreed-upon definition of a depression. During the Great Depression of the 1930s, unemployment peaked at 25% and the stock market lost 90% of its value from boom to bust. Today, there are safeguards in place that didn't exist in the 1930s: deposit insurance, unemployment benefits and the ability of the government to spend trillions of dollars to bolster the economy.

sell-off: A sell-off is the rapid selling of securities such as stocks, bonds or commodities. A sell-off can occur in an individual security – a company's stock, the 10-year Treasury note, crude oil futures – or in a broader market. A minor sell-off is called a pullback.

S&P 500: The market indicator most professional investors use to determine how stocks are performing. It encompasses 500 top companies in leading U.S. industries. Many mutual funds use it as the benchmark they measure their own performance against.

unemployment rate: In the United States, this estimate of the number of unemployed residents seeking work is compiled monthly by the Bureau of Labor Statistics, an agency of the Labor Department.

Each month the bureau selects a cross section of the population and conducts interviews to determine the size of the U.S. workforce. The workforce is defined as the number of people who either have a job or are looking for one. The unemployment rate is expressed as a percentage: the proportion of the workforce that is out of work and looking for a job, adjusted to reflect variable factors such as seasonal trends.

The unemployment rate does not count people who are not looking for work, whether that is because they have given up, they are ill or they are caring for a family member. Nor does it count people who lost a full-time job and took a part-time job while they continue to look for full-time work. When workers are jobless for 27 weeks or more and have actively sought employment during the previous four weeks, the Bureau of Labor Statistics classifies it as long-term unemployment.

401(k) plan: A type of tax-free retirement savings account. Money in the account is invested in a variety of assets including stocks, according to options chosen by the account holder.