International markets plunged overnight, leading to a drop in the U.S. markets on Monday after investor worry about a possible upcoming recession, a panic that has been building for days.
The S&P 500 Index was down 8.6% and the NASDAQ 100 fell 5.4%, as of Monday morning, and tech stocks including Apple, Amazon and Google declined sharply. Investors have purchased U.S. treasuries, leading a decline in mortgage rates.
Greg McBride, chief financial analyst at comparison site Bankrate, said that the "refinancing door has swung open" for people who took out a mortgage at a rate above 7%.
Here's what you should know.
Stock market live updates: How US markets are feeling impact of plunging global markets
A correction is a market drop of at least 10% from a recent high, which typically occurs about once a year.
According to the World Economic Fund, there is no globally recognized definition of a recession. The National Bureau of Economic Research says a recession is a "significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators."
An "earnings recession" occurs when there has been earning declines or negative earnings growth for at least two consecutive quarters. According Forbes, during an earnings recession, a majority of company profits declined "year-over-year for two or more quarters in a row."
A bear market is when a stock or market index falls 20% or more, and a bull market is a sustained rise in stock prices without a bear market, or 20% drop.
How long do recessions last?
There is no fixed time on how long a recession will last, and it ends when economic growth resumes. A recession may last only a few months, but it could take the economy years to recover to its former peak, Investopedia says.
Do interest rates go down during a recession?
The World Economic Forum says central banks can lower short-term interest rates, which can help increase consumer spending high-cost items like cars or homes. Governments can also add policies like tax cuts or begin infrastructure programs.
Is a recession good for home buyers?
If you're ready to buy a house, a recession could mean good news for the cost of borrowing.
If banks lower short-term interest rates to help end a recession, the cost of borrowing money for high-priced items like homes or cars is lower, which can lead to an increase in consumer confidence and spending, the World Economic Forum said.
Contributing: Medora Lee, Paul Davidson and Dan Morrison, USA TODAY.
This article originally appeared on USA TODAY: Correction vs. Recession: Key terms to know amid financial market dive