The Nasdaq Just Hit Correction Territory. History Says the Stock Market Will Do This Next (Hint: It May Shock You).

Trevor Jennewine, The Motley Fool

Sat, March 28, 2026 at 4:08 AM EDT 5 min read

The U.S. stock market is having a dismal year. Investors are concerned about the economy, not just because President Trump’s tariffs have coincided with slower GDP and jobs growth but also because the U.S.-Iran war has pushed oil prices to a multiyear high.

Consequently, the three major stock market indices have dropped sharply from their peaks: The S&P 500 (SNPINDEX: ^GSPC) is down 7.1%, the Dow Jones Industrial Average (DJINDICES: ^DJI) is down 8.4%, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) is down 10.6%.

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That puts the Nasdaq squarely in market correction territory. While that sounds ominous, the index has usually rebounded quickly. History says this will happen next.

The Nasdaq Composite tracks the performance of over 3,300 companies listed on the Nasdaq Exchange. The index is most heavily weighted toward the information technology and consumer discretionary sectors and is commonly regarded as a benchmark for growth stocks.

On March 26, the Nasdaq entered market correction territory, meaning it closed more than 10% below its most recent bull market peak. For investors curious about the specific dates, the index hit a record high of 23,958 on Oct. 29 but has since dropped to 21,408 amid economic uncertainty surrounding Trump’s tariffs and soaring oil prices.

Drawdowns are never pleasant, but corrections are more common than investors may realize. The Nasdaq has fallen at least 10% from its record high a dozen times since 2011, meaning the index has suffered corrections almost annually over the last 15 years. In most cases, the Nasdaq recouped its losses quickly.

The table shows the Nasdaq’s 12-month return following its first close in correction territory.

Data source: YCharts. Table created by author.

As shown, during the last 15 years, the Nasdaq has returned an average of 22% over the 12-month period following its first close in correction territory. In other words, the index will advance 22% to 26,118 by March 26, 2027, if its performance aligns with the historical average.