#ReboundRally What is a recovery in finance?

In finance and economics, a recovery refers to a bounce back from a previous period of negative activity or losses — such as a company posting strong earnings after a year of losses or launching a successful product line after struggling with false starts.

In the context of stocks or other securities, a recovery means that the price has risen from a lower level.

For the economy as a whole, a recovery means that economic activity has increased from lower levels, such as a recovery after a recession. 

Key takeaways

Recoveries occur when events, trends, or securities change course and rise after a period of decline.

A company might report strong earnings for its fiscal year after losses the previous year, or a successful product launch after several flops.

In stock market terms, a recovery can be a day or a period of time when a stock, or the stock market in general, recovers after a selloff.

When it comes to the economy, a recovery is part of the normal business cycle that includes expansion, peak, recession, depression and recovery.