Key Points
-
The Nasdaq Composite closed more than 10% below its record high on Nov. 5, putting the index in correction territory.
-
In the last decade, the Nasdaq returned an average of 21% over the 12-month period following its first close in correction territory.
-
The Invesco QQQ Trust, an index fund tracking the Nasdaq-100, has easily outperformed the S&P 500 since 1999 and now is a good time to buy.
-
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.
Missed AI’s “Act 1”? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005. But according to our analysts, we’re only at the end of “Act 1″—the R&D phase. “Act 2” is the global rollout. Continue »
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.
| Nasdaq First Close in Correction Territory |
12-Month Return |
| October 2018 |
15% |
| June 2019 |
31% |
| February 2020 |
54% |
| September 2020 |
41% |
| March 2021 |
1% |
| January 2022 |
(24%) |
| August 2024 |
25% |
| March 2025 |
24% |
| March 2026 |
19% |
| Average |
21% |
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.
Investors should consider buying this Nasdaq index fund
The Invesco QQQ Trust (NASDAQ:QQQ) measures the performance of the Nasdaq-100, a subset of the Nasdaq Composite that includes the 100 largest non-financial companies listed on the Nasdaq Exchange. The 10 largest holdings are listed by weight below:
- Apple: 8.3%
- Nvidia: 7.8%
- Microsoft: 6.7%
- Alphabet: 5.3%
- Amazon: 4.7%
- Micron Technology: 4%
- Advanced Micro Devices: 3.6%
- Tesla: 3.3%
- Meta Platforms: 2.8%
- Walmart: 2.8%
The Invesco QQQ Trust has returned 1,480% (10.5% annually) since its inception in 1999, easily outpacing the broader S&P 500, which has returned 885% (8.6% annually) over the same period. Outperformance in the Invesco QQQ Trust boils down to outperformance in the technology sector, and that trend is likely to continue.
Investors may be nervous about artificial intelligence spending, but AI itself will undoubtedly be transformative. Indeed, JPMorgan Chase strategists estimate AI adoption is happening three times as quickly as internet adoption, making it one of the fastest-adopted technologies ever. And the cost of AI is falling faster than any other transformative technology in history.
So, as the AI boom unfolds, the technology-heavy Nasdaq-100 (and the Invesco QQQ Trust) are likely to deliver strong returns. And now is a particularly good time to buy shares given that the Nasdaq Composite just closed in correction territory.
Should you buy stock in NASDAQ Composite Index right now?
Before you buy stock in NASDAQ Composite Index, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and NASDAQ Composite Index wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $358,037!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,229,708!*
Now, it’s worth noting Stock Advisor’s total average return is 897% — a market-crushing outperformance compared to 211% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of November 6, 2026.
JPMorgan Chase is an advertising partner of Motley Fool Money. Trevor Jennewine has positions in Amazon, Nvidia, and Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, JPMorgan Chase, Meta Platforms, Micron Technology, Microsoft, Nvidia, Tesla, and Walmart. The Motley Fool has a disclosure policy.
