A look at the history of market corrections suggests the speed at which the S & P 500 fell into the current one is actually encouraging for investors. The rapid descent in the S & P 500 is unusual, given that it was accomplished in just 22 calendar days, far shorter than the average of 80 days in 38 other examples of declines of 10% or more going back to World War II, according to CFRA Research. The firm reviewed data for markets that entered both corrections as well as those that went on to become full blown bear markets, with declines of 20% or more. The latest swoon could give investors reason for some hope, as history shows that speedy declines are followed by even faster recoveries. According to a CFRA review of 12 corrections going back to 1990, the S & P 500 rose by an average of 22% just six months after the 10% decline. "If history should repeat, or even rhyme, because of this correction's speed in falling 10%, there is a high probability of it being relatively short and shallow," Sam Stovall, chief investment strategist at CFRA Research, wrote on Monday. To be sure, the CFRA strategist also noted potential differences this time, saying that uncertainty over trade and tariff policy — currently the biggest market overhang — could remain an issue for some time, as the rapid-fire policy changes from the Trump administration show no sign of abating. Recession or no recession But by far the biggest factor that will decide whether this market correction turns into a bear market is whether or not the U.S. economy is headed for a recession, a fear that has been growing on Wall Street amid some signs of falling consumer and corporate confidence. Yet investors have plenty of reason to stay confident in the economic backdrop. Household balance sheets remain strong and Monday's retail sales report for February, while somewhat soft, showed the consumer is still spending. Warren Pies, founder at 3Fourteen Research, said he doesn't see a recession in the cards, at least at the moment, though he will continue to monitor the spending by high-income consumers for any signs of stress. While he expects there will be further volatility, he also said investors who've taken a strong defensive stance could start looking to buy more stock in a couple weeks. "You need to start having an offensive mindset, given the fact we don't see a recession at this point in time," Pies told CNBC's " Closing Bell " on Monday. "Offensive mindset means that if you're underweight, get to benchmark weight. But on the other hand, we're not ready to get overweight equities again." "We're happy sitting here at benchmark weight after this 10% correction," Pies added. "I do think that so far the lows are in for the next two weeks in the month of March. But I think the month of April is going to be, potentially, we revisit and break through the lows we saw in March. So, if you want to get overweight equities, to me, I think you wait until April." To others, recent stock market activity also suggests a recovery could be coming. Rich Ross, technical analyst at Evercore ISI, said Friday's trading session — when stocks staged a relief rally — suggests a "bullish reversal" is in store. On Monday, the major averages built on that comeback , although the gains evaporated Tuesday. "The Bull Market remains intact and poised to resume in earnest after Friday's furious finish (+200bps) and Bullish reversal atop support which has marked the nadir of the past two -10% corrections," Ross wrote on Monday. "Set against a backdrop of palpable fear, systematic selling, extreme oversold conditions, max defensive internals, and outsized declines not seen since the Bear Market of '22.'" Most to lose, most to win If the U.S. skirts a recession, the stock market recovery could be remarkable. Bill Stone, chief investment officer at Glenview Trust, found that the average forward returns for the S & P 500 within 12 months of a correction were "rather robust." In data going back to 1980, the S & P 500 rose 19.1% within one year of a correction if a recession was avoided, Stone found. The index gained just 1.9% if it didn't. Some sectors could be especially poised to benefit. CFRA found that those sectors and stocks that were punished the most on the way down also have the potential to bounce the most. In fact, six months after a correction ended, what had been the three biggest underperforming sectors rallied 27%, outperforming the broader index 82% of the time, according to CFRA. Meanwhile, the sectors that lost the least during the correction wound up gaining just 14% six months later, exceeding the market only 8% of the time, the firm said. The three worst S & P 500 sectors in the current selloff are communication services, consumer discretionary and technology, which together also hold the Magnificent Seven stocks. The three sectors that have so fared the best are defensive groups such as consumer staples, health care and utilities. Some stocks that have been especially hard hit include Apollo Global Management , American Express and Carnival , CFRA Research said. — CNBC's Gabriel Cortes and Yun Li contributed to this report.
