By Alex Eule | Thursday, March 13

After the Correction? The market has been in rough shape for weeks, and now we have an official label for the decline: a correction. 

With today's 1.4% slide, the S&P 500 entered correction territory, the Wall Street term for when a stock or index falls 10% from a previous high. 

For the S&P 500, that high was less than a month ago, on Feb. 19. Since then, the index has fallen 10.1%. 

The fall happened over 16 trading days, the fastest correction since the market's rapid collapse in February 2020, in the early days of Covid-19. There have been four other corrections since then.

There's some good news in all this. Corrections aren't uncommon, and they don't usually last all that long. My colleague Paul La Monica cites some important context on Barrons.com today:  

"Fortunately, market corrections are usually a short-term event, occurring an average of once per year and lasting three to four months,” fund managers at Weitz Investment Management, an Omaha-based firm focusing on long-term investing, said in a report.

“The average market loss during a correction is about 13%, and historically, that loss has been recovered over a period of about four months. In the grand scheme of things, a correction can be little more than a blip on the radar for investors with a long-term focus,” the Weitz managers said.

If we count one year from the start of the last 15 corrections, the S&P 500 has been up 13 times, and it's seen an average gain of 15.3%, according to Dow Jones Market Data. 

Then again, we're not living in average times. Tariffs and potential trade wars didn't dominate the conversation for most of those previous corrections. Consumers and investors are grappling with new dynamics across the U.S. and global climate. That's been the trigger for this correction, and there's no sense of renewed clarity coming anytime soon. 

One of the more notable messages to hit my inbox this week came this morning from market strategist Ed Yardeni, the President of Yardeni Research. Yardeni is a longtime market bull, but he's rethinking his perspective:

It has dawned on Wall Street (and us!) that President Trump’s tariffs aren’t negotiating chips to help the US lower tariffs around the world, promoting free trade. They’re trade barriers, triggering other countries to respond in kind, and they jeopardize US inflation and economic growth. We expect Mr. Trump to relent lest he cause a recession that reverses the GOP majority in Congress during the 2026 mid-term elections. But in response to the now heightened risk of stagflation, we are lowering our S&P 500 valuation expectations and year-end price target. 

Yardeni now sees a best-case year-end price target of 6,400 for the S&P 500 down from 7,000. The revision isn't about lower corporate earnings, Yardeni notes, but rather lower multiples on those earnings -- a function of lower investment sentiment or confidence. The large-cap index closed at 5,521 today, so Yardeni isn't even officially bearish. But his downward shift is notable. 

My colleague Ian Salisbury sums it up: 

Yardeni’s forecast is still relatively optimistic. It suggests stocks, now down about 5% year to date, will claw their way back, finishing 2025 up 8% from where they started in January. However, that is far less bullish than the previous forecast, which called for a 18% full-year gain. To put that in broader context, the S&P 500’s historical average gain going back to 1926 is about 10%.

Read more about Yardeni's revised call here.

DJIA: -1.30% to 40,813.57
S&P 500: -1.39% to 5,521.52
Nasdaq: -1.96% to 17,303.01

The Hot Stock: Intel +14.6%
The Biggest Loser: Adobe -13.9%

Best Sector: Utilities +0.3%
Worst Sector: Consumer Discretionary -2.5%

Buying on the Dip

The silver lining of any correction is that stocks go on sale, at least relative to what they cost before the selloff.

Whether investors decide to go shopping will determine the direction of stocks from here. For those looking to buy on the dip, one market favorite looks decidedly cheap, my colleague Angela Palumbo writes today. 

Nvidia -- the AI darling that led the market for the last two years -- now trades for 23.3 times per-share earnings expected over the next 12 months. To put that in perspective, Nvidia has fetched an average forward P/E of 40 times over the last five years. Nvidia also looks cheap compared to many old-fashioned businesses. Angela offers these comparisons: 

Nvidia is also cheaper than several consumer staples companies, including Estée Lauder at 33.5 times; Walmart, at 32.8 times; Monster Beverage, at 29.6 times; Airbnb at 27.9 times; McCormick, at 26.5 times; and Procter & Gamble, at 23.9 times.

In the consumer discretionary sector, Nvidia is less expensive than Chipotle Mexican Grill, at 37.2 times; Starbucks at 30.5 times; Yum! Brands, at 25.4 times; and Tractor Supply, at 24.4 times.

To be sure, there's no guarantee of the "E" in a PE ratio. If Nvidia's earnings growth slows more than expected, its E would fall, and its P/E would rise. 

In fact, the company's current P/E could be investors betting on that scenario. But for those people bullish on AI's future -- and Nvidia's continued growth -- the chip maker is downright cheap. 

Read the rest of Angela's story here.