What Does it Mean When the Stock Market Is Down?

Overview

Stocks are bought and sold on Wall Street.

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When the stock market is down, financial value is being eliminated. Stocks come under selling pressure and drag some of the major stock market indexes lower with them. There are multiple factors that can trigger a market sell off, which results in a down market.
Types

The Dow Jones Industrial Average, Nasdaq and S&P 500 are the leading U.S. indexes that trade with a value. The Dow is considered synonymous with stock market activity, and when the index is under pressure the stock market is said to be trading down.

Bear Market

During prolonged periods of stock market declines, stocks are characterized as being in a bear market. When the Dow declines by 20 percent, the markets are officially in a bear market cycle, according to the Wall Street Journal.
Buying Opportunity

For some, periods of selling lead to attractive buying opportunities. Sam Stovall of Standard & Poor's told CNBC in an August 2009 interview that although traders were "taking profits," which means they were selling, it offered a long-term buying opportunity in stocks.
Triggers

Certain events trigger selling in the stock market. High unemployment figures translate into less consumer spending, which is bad for the economy, and stocks suffer. A disappointing corporate earnings report can also trigger a stock market sell off.
Stocks And Bonds

There is an inverse relationship between stock and bond prices and neither asset class tends to be "in favor" at the same time, according to the New York Times. When stock prices fall, bond prices typically rise. When this happens bond yields, which are equivalent to returns, decline.