Wtf am I supposed to do when a stranger/someone I barely know makes a self-depricating joke to me?

So this has happened to me quite a few times, and I never really know how to react.

Someone I barely know, or a friend of a friend, or even a stranger will make a self-deprecating joke and my mind just kinda freezes momentarily. Like... am I supposed to laugh? Am I supposed to reassure them? If I laugh, I feel like an asshole. If I say something like "nah, you're fine" it feels forced and awkward.

I actually like self-deprecating humor and sometimes use it myself if I feel like it fits the conversation, but only with friends who know me well and I know it won't make them feel awkward. When someone does it to a stranger, it always feels like they're either fishing for compliments or putting the other person in a weird social position unnecessarily, at least that's how I see it.

Is there some socially accepted way to respond to this? Or is it just one of those social traps everyone silently deals with?