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Good morning! It’s Friday and we’re covering what usually happens after the stock market drops like it just did, why Nvidia looks cheap right now, and Scott Bessent’s latest comments. First time reading? Join 190,000 self-directed investors gaining an edge every morning. Sign up here. 

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What follows a correction?

In investing, as in life, bad news gets better when you zoom out.

The S&P 500’s rapid decline into correction territory — down 10% from its February 19 peak — has confirmed the jitters of already-spooked investors.

Fueled by uncertainty surrounding tariffs and inflation, the drop through Thursday marks the fastest correction since the pandemic crash in early 2020.

In fact, as Callie Cox of Ritholtz Wealth Management highlighted on X, the S&P 500’s latest drop is the seventh-fastest into correction levels since 1950.

Still, if history is any guide, a correction isn’t likely to cause a lasting downturn.

This level of pullback typically occurs every year for markets that otherwise tend to move up and to the right.

Dating back to 2008, the S&P 500 has averaged a 5% gain in the six months after a correction, and a 15.3% gain after 12 months, according to Dow Jones data cited by Morningstar.

In other words, this is a familiar story that often ends well.

Panic leads to selling, which drags on valuations; bargain hunters scoop up stocks, then recovery ensues. 

The market isn’t just a pricing machine. It’s a barometer that fluctuates between fear and greed. 

To be fair, the current backdrop may justify some of the fear. President Trump continues to jolt markets with on-again, off-again tariffs, and investors’ concerns around economic growth are real. 

Then again, the S&P 500 has seen a drawdown between 5% and 15% in more than one-quarter of all trading days since 1950, according to LPL Financial chief technical strategist Adam Turnquist. 

On the other hand, he noted, 8% of trading days have been record highs. 

“The average market loss during a correction is about 13%, and historically, that loss has been recovered over a period of about four months,” wrote strategists at Weitz Investment Management in a report.

Market snapshot:

Elsewhere:

🚢 The “detox” period for the economy doesn’t have to mean recession. That’s what Treasury chief Scott Bessent said Thursday. He reiterated his view that current government spending is “unsustainable,” and that the administration is aiming to have a smooth transition period into the new-era economy. (CNBC)

📉 Producer price inflation cooled in February. Thursday data showed the core PPI, which tracks price changes for companies excluding food and energy, rose 3.4% from a year ago, down from the 3.6% seen in January. One day earlier, February’s CPI also showed its lowest print in four years. (Yahoo Finance)

💰️Nvidia now looks cheap by historical standards. The AI stock is down double-digits to start the year, and its trading around 23.3 times the per-share earnings expected the next 12 months. That’s below its five-year historic average — and it’s also cheaper than Netflix, Starbucks, and Walmart. (Barron’s)

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Rapid-fire:

• President Trump says “I think it’ll happen” on US annexation of Greenland (CNBC)

• Both Goldman Sachs and Yardeni Research — a typically-bullish Wall Street firm — lowered their S&P 500 price targets for the year (TKer)

• The Trump family’s crypto venture has discussed doing business with Binance (Bloomberg)

• Gold touched a new record high and Wall Street analysts see that rally continuing (Yahoo Finance)

• A judge ruled that Trump must reinstate fired federal workers at six agencies (Barron’s)

• European alcohol stocks dropped Thursday after the White House threatened 200% tariffs (WSJ)

Last thing:

About me:

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day, unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else. Feedback? Reply directly to this email, ping me on X @philrosenn, or write me [email protected].