Every so often, Wall Street reminds investors in not-so-subtle fashion that stocks can move in both directions. On Monday, March 10, the growth-driven Nasdaq Composite (^IXIC -0.38%) plunged by 727.90 points, which certainly caught investors' attention.
While the third-largest single-session point decline in the Nasdaq's storied history is bound to turn heads, perspective can change everything on Wall Street, as these three statistics demonstrate.
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1. Points aren't percentages
The third-largest point decline on record for the Nasdaq Composite worked out to a 4% move lower on a percentage basis. This doesn't even come close to cracking the 20-largest daily percentage losses of all-time for the Nasdaq, which range from (6.3%) to (12.32%).
2. Stock market corrections are common
Including Monday's 728-point decline, the Nasdaq Composite has shed roughly 13% of its value over the prior 13 trading sessions. This officially puts the index in correction territory (down 10%-plus).
Corrections are a perfectly normal and healthy aspect of the investing cycle. Based on data from Yardeni Research, the benchmark S&P 500 (^GSPC -0.39%) has endured 39 corrections since the start of 1950, which works out to a drop of at least 10%, on average, every 1.9 years.
3. Bulls take the escalator, while bears take the elevator
Emotions tend to play a key role when the major indexes are moving lower. According to an analysis by Bespoke Investment Group, the average S&P 500 bear market lasted just 286 calendar days (about 9.5 months) from the start of the Great Depression to June 2023.
In comparison, the typical S&P 500 bull market spanning 94 years has stuck around for 3.5 times as long -- 1,011 calendar days.
While big-number daily moves in the Nasdaq Composite make for great headlines, taking a step back and examining a larger set of data paints a clearer picture. For long term-minded investors, wagering on a rising stock market is historically a winning bet.
