#MarketRebound

Understanding Rebounds

Rebounds are a natural occurrence as part of the business cycle, the cyclical phases of expansion and contraction that naturally occur in the economy. Economic recessions and market declines, in fact, are an inevitable part of the business cycle. Economic recessions occur periodically when business grows too quickly relative to the growth of the economy.

What is a rebound in finance?

In finance and economics, a rebound refers to a recovery 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 rebound means that the price has risen from a lower level.

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

Key Takeaways

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

A company may report solid profits for its fiscal year after losses the previous year, or a successful product launch after several failures.

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

In terms of the economy, a recovery is part of the normal business cycle that includes expansion, peak, recession, depression, and recovery.