The S&P 500 is 5.6% below its all-time high reached May 22 and is the first decline of more than 5% in the broad market index since November 2012, according to Bespoke Investment Group. That marks the 18th time, the index has fallen 5% or more since the bull market began in March 2009. The average drop during the so-called "pullbacks" has been 8.3%.
The two "largest" price drops during this bull market came when the "Fed was (getting) out of the market," says Bespoke co-founder Paul Hickey. Both times, when the Fed withdrew stimulus, the market suffered a drop of more than 10% -- the conventional definition of a correction.
In 2010, the S&P 500 fell 10.3% from May 12 to June 7. And in 2011, the benchmark index plunged 17.3% between July 7 and August 8, Bespoke data show.
As investors around the world continue adjusting to the idea of less market support – or "the end of free money" -- from central banks globally, including the Fed, the market is likely to stay volatile, says Ron Florance, managing director of investment strategy at Wells Fargo Wealth Management.
"The Fed's action represents the continuing transition that is occurring in the global economy following the financial downturn and the recovery period that has followed," Florance says. "We expect financial markets to respond with a measure of volatility as the 'normalization' process unfolds."