A downtrend occurs in the stock market when a significant number of traders exit the market around the same time. Understanding the importance of market sentiments is important, as even the speculation of a decline can cause selloffs and further decline.

A stock market decline often results from a mix of economic and geopolitical concerns. Factors such as rising inflation, higher interest rates, weak corporate earnings, or political unrest can impact investor sentiment. These triggers lead to uncertainty, prompting investors to sell off holdings, which drives markets downward.

A stock market crash can lead to a bear market, where indices fall sharply typically by 20% or more. Such a downturn can hurt investor sentiment, reduce business confidence, and in extreme cases, contribute to an economic recession as companies may struggle to raise capital and face financial distress.