The Nasdaq 100 ticker at the Nasdaq MarketSite in New York, USA, Thursday, November 5, 2026.
Michael Ngale | Bloomberg Getty Images
At Nasdaq Composite plunge into correction territory there. History shows more selling is possible in the near term, but the recovery finally took place three months later.
The tech-heavy index slid more than 5% on Thursday, closing more than 11% below a record hit last month. On Wall Street, a drop of more than 10% is a correction. A 20% pullback qualifies as a bear market.
In the 10 previous correction episodes over the last decade, the sell-off in 2025, 2022, 2020 and 2018 was followed by a sharper sell-off in the following months. But the Nasdaq is back in rally mode again after six months for all but one of these events: 2022.
Overall, the Nasdaq gained an average of 9.41% from the bottom of the correction over the next three months and 17.03% over the six months.
The correction of January 2022 is the one that gives more difficult results. The Nasdaq lost another 18.3% over the next six months and fell 24.3% a year later.
Nasdaq Composite
Deena Zaidi and Nick Wells
The catalyst for this correction was Democrats sweeping the House and Senate in Tuesday’s midterm elections. The party also made significant gains in Texas, where Gina Hinojosa won the governor’s race after campaigning for an outright moratorium on data center development.
Investors are now weighing whether tighter state-level restrictions could slow data center construction, putting pressure on companies linked to the artificial intelligence trade.
Frank Cappelleri, founder of CappThesis, pointed to past midterm election cycles for guidance and found that there was also more volatility in the near term.
The chart analyst said the Nasdaq has been higher 12 months after an election in all but one of the 13 midterm cycles since 1974.
“The caveat is that the road can be volatile,” he said.
Cappelleri pointed to 2018, when the Nasdaq rallied the day after Democrats won the House. A sharp December selloff followed, but the index ended up about 15% higher a year after the election, he said.
Stock Chip tumbled there, with iShares Semiconductor ETF Share price history down 12% and the worst day since the Covid-19 outbreak in March 2020.
– CNBC’s Fred Imbert contributed to this report