DEFINITION of 'Downswing'
A reduction in the overall level of economic or business activity. Downswings may be caused by fluctuations in the business cycle or a variety of macroeconomic events. Downswing may also refer to the downward movement in the value of a security following a period of stable or rising prices.
BREAKING DOWN 'Downswing'
A downswing is one of many buzzwords related to poor performance in the market. When interest rates rise, the economy will typically experience a downswing. The new rates make it more difficult for businesses to acquire financing, which results in a lower number of new firms and less expansion.
A downswing in the stock market or a single security will usually occur after the market has peaked. At this point, a bear market starts to occur as prices swing lower.