The U.S. stock market had a dismal October. The S&P 500 (SNPINDEX:^GSPC) fell 0.9% in what has often been one of the strongest months of the year. And the Nasdaq Composite (NASDAQINDEX:^IXIC) declined 5.3% as investors panicked about the sustainability of the artificial intelligence boom, representing its worst month since March 2025.
The losses have now spilled into November. On Thursday, Nov. 5, the S&P 500 and Nasdaq Composite fell 4.1% and 5.3%, respectively, erasing the post-midterm election gains and pushing the Nasdaq into correction territory. The sell-off was particularly brutal among technology companies, suggesting Wall Street is worried that Democratic victories in the midterms could slow AI spending.
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However, there is a silver lining for patient investors. Historically, corrections have been an excellent time to put money into the stock market. Here are the important details.
Image source: Getty Images.
The Nasdaq has historically rebounded quickly after falling into correction territory
The Nasdaq Composite measures the performance of more than 3,000 companies listed on the Nasdaq Exchange. The index is widely regarded as a benchmark for growth stocks because it is heavily weighted toward the information technology sector.
On Nov. 5, the Nasdaq entered market correction territory, meaning it closed at least 10% below its recent bull market high. For readers curious about specific dates and numbers, the Nasdaq peaked just below 27,600 on Oct. 6, and the index has since declined 11.6%.
Corrections are never pleasant, but they are more common than investors may realize. The Nasdaq has now fallen at least 10% from its high on 10 occasions during the last decade, meaning corrections have occurred at an average pace of once per year. Fortunately, the recoveries have often been swift.
The chart below shows the Nasdaq’s 12-month return following its first close in correction.
Data source: YCharts.
As shown above, over the last decade, the Nasdaq Composite returned an average of 21% during the year following its first close in correction territory. Applied to the current situation, history says the index will climb 21% to 29,421 by November 2027. That implies more than 6% upside from its previous record high.
