Downswing

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Business Cycle

    The fluctuations in economic activity that an economy experiences ...
  2. In The Tank

    A slang term referring to very poor performance, as in that of ...
  3. Recession

    A significant decline in activity across the economy, lasting ...
  4. Peak

    The highest point between the end of an economic expansion and ...
  5. Bear Market

    A market condition in which the prices of securities are falling, ...
  6. Market Swoon

    A slang term for a decline in the overall value of the stock ...
RELATED FAQS
  1. Are small cap companies less safe investments than large cap companies?

    Small-cap companies are typically less safe investments than large-cap companies, especially in an economic downturn. Large-cap ... Read Full Answer >>
  2. Are small cap companies more risky investments than large cap companies?

    Small cap companies are riskier investments than large cap companies, because small cap companies have less access to resources, ... Read Full Answer >>
  3. Are small cap companies a safer investment than large cap companies?

    Typically, small cap companies are not a safer investment than large cap companies. Small cap companies have more growth ... Read Full Answer >>
  4. Are all multinational corporations also large cap companies?

    Not all multinational corporations are large-cap companies. Large-cap companies have a market capitalization of $5 billion ... Read Full Answer >>
  5. What is the best way to invest in small cap companies?

    It is best to invest in small cap companies as part of a diversified portfolio that includes large cap companies, and to ... Read Full Answer >>
  6. I'm worried about the economy and want to move my IRA funds from stocks and bonds ...

    If you move you funds from stocks and bonds to cash, the movement will not be taxable. The money is taxable only if you take ... Read Full Answer >>
Related Articles
  1. Investing

    The Ups And Downs Of Investing In Cyclical Stocks

    This strategy can be profitable but only if you know when to dump these stocks.
  2. Fundamental Analysis

    Where's The Market Headed Now?

    Whether up, down or sideways, learn about some of the factors that drive stock market moves.
  3. Active Trading Fundamentals

    Capitalizing On Seasonal Effects

    We show you how to take advantage of periodic trends in the equity markets.
  4. Active Trading

    Market Cycles: The Key To Maximum Returns

    You need to understand the various phases of the market cycle to avoid bubbles and make the best investments.
  5. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  6. Economics

    Riding The Bear Into A Bull Market

    How can you get back into the market to avoid missing market recovery gains? Find out here.
  7. Investing

    What A Rate Hike May Mean For Stocks

    By the end of the year, investors will likely be contending with the first Federal Reserve (Fed) rate hike in nearly a decade.
  8. Taxes

    Corporate Tax Rates: The Highs and the Lows

    The United States is No. 2 in the world for its high corporate tax rate. There are ways around paying it, and many nations with lower rates are worse off.
  9. Entrepreneurship

    What's the Verdict on START-UP NY?

    START-UP NY is an initiative designed to attract companies to New York State by giving them 10 years of tax breaks. Sounds good, but is it a success?
  10. Economics

    How To Calculate The GDP Of A Country

    We explain how to calculate the GDP of a country using two different approaches.

You May Also Like

Hot Definitions
  1. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  2. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  3. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  6. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
Trading Center