The Nasdaq Composite fell about 4.9% on Nov. 5, 2026, leaving it 11.4% below its October record. That makes it a Nasdaq correction, the usual name for a drop of 10% or more from a high. I went back through every close since 1971 to see what happened after the last 31 times the index crossed that line. The short answer: slightly more than half the time it was over quickly, and the rest of the time it got a lot worse.
Why did the Nasdaq fall?
Investors dumped chip and AI stocks after the US midterm results.
According to Quartz, Broadcom, Nvidia and Oracle each fell about 6% after the midterm results, and CNN reported worries that a Democratic sweep could mean tougher rules for data centers. The index had already slipped in October, so this was the second leg of a fall, not a bolt from the blue.
How do Nasdaq corrections usually end?
Here is every Nasdaq drop of 10% or more from a record since 1971. Each dot is one drop, placed at the year it started and as deep as it went. The dashed line marks 20%, where a correction becomes a bear market:
18 of the 31 drops stopped above the bear-market line.
Two things stand out.
The good news: when a correction stayed a correction, it rarely dragged on. The bottom came a median of about 5.5 days after the index first closed 10% down, and the old record was back about 116 days after the peak, roughly four months.
The bad news: the 13 drops that went past 20%, a bear market, were not a bit worse. They were a different animal. The typical one bottomed about 30.0% down and took about 524 days, a year and a half, to get back to the old high.
The last three drops went both ways.
| Recent drop | How far it fell | Kind |
|---|---|---|
| 2022 | 36.4% | Bear market |
| 2025 tariff shock | 24.3% | Bear market |
| March 2026 | 13.2% | Correction |
So the 10% line tells you very little on its own. At this point in the fall, the corrections and the bear markets look the same.
Can a strong economy prevent a bear market?
It’s tempting to think so. Jobs are holding up, and recessions do drag stocks down. But seven of the 13 Nasdaq bear markets came without a US recession, including 1987, 2022 and the 2025 tariff shock. A good economy makes a deep fall less likely. It doesn’t rule one out.
What I’m doing, and what I’m watching
I hold a Nasdaq-100 fund, so I have skin in this. On the day of the drop, I made no trades. I checked one thing after the close: my split between dividend funds and growth funds. Growth had slipped from about a fifth of the account to a bit less, still inside my range, so there was nothing to fix. I don’t open the order screen on days like that, and I don’t buy more just because prices fell.
I also looked at what is actually inside my fund. I thought an index fund meant broad diversification. But the biggest holdings are the AI-linked giants, so when one story wobbles, they all wobble together. That’s why I keep my dividend side firmly in place.
I can’t tell you whether this stops at 20%, and I don’t think the odds, 18 of 31, are good enough to act on. Instead, I’m watching three things:
- Whether big tech’s spending on data centers keeps growing faster than its sales.
- Whether any of them talk about cutting investment in the next round of earnings.
- Whether the selling spreads beyond chips and AI. A fall led by a few giants is different from one that drags down everything.
If those stay calm, history says this is more likely to be one of the 18. If they don’t, it may be one of the 13.
Sources
Method: We used every Nasdaq Composite close since February 1971. A drop starts when the index closes 10% or more below its prior record and ends at the next record; a bear market is a drop that reached 20%. Medians are across completed drops.
- Federal Reserve Bank of St. Louis (FRED), NASDAQ Composite Index
- FRED, US recession indicator (NBER)
- Yahoo Finance, NASDAQ Composite history
- Quartz, Nasdaq plunges as chip stocks sell off after midterms (November 5, 2026)
- CNN, Stocks plunge as midterm results send AI trade into a tailspin (November 5, 2026)