Nasdaq drops into correction territory — here’s what typically happens next — SkimNews
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- Nasdaq Composite slid more than 5% Thursday and closed more than 11% below last month’s record, crossing Wall Street’s 10% correction threshold; a 20% decline would qualify as a bear market.
- Nasdaq Composite history across 10 corrections over the past decade shows further one-month selling in the 2025, 2022, 2020 and 2018 episodes, followed by a return to rally mode after six months in all but 2022.
- Nasdaq Composite gained an average of 9.41% from the correction bottom over the following three months and 17.03% over six months, while the 2022 correction brought another 18.3% six-month drop and left the index down 24.3% a year later.
- Democrats swept the House and Senate in Tuesday’s midterms and made significant gains in Texas, where Gina Hinojosa won the governor’s race after campaigning for an immediate moratorium on data-center development.
- Frank Cappelleri of CappThesis found the Nasdaq was higher 12 months after the election in all but one of 13 midterm cycles since 1974, but said the path can be volatile; in 2018, it rallied after the House result, sold off sharply in December and still finished about 15% higher a year later.
- SOXX fell 12% Thursday, its worst day since the Covid-19 outbreak in March 2020. Investors were weighing whether tighter state-level restrictions on data-center construction would slow projects and pressure companies tied to the artificial-intelligence trade.
Why it matters: For AI-linked companies and chip investors, the immediate change is concrete: SOXX lost 12% while data-center restrictions entered the investment debate. Yet the Nasdaq’s historical record is not uniformly reassuring: its typical three-month recovery averaged 9.41%, but the 2022 episode produced another 18.3% decline over six months.
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