Nasdaq Correction: 3 Things Every Investor Should Know

Adria Cimino, The Motley Fool

Sun, Mar 9, 2025, 3:10 PM 5 min read

The Nasdaq, on with the S&P 500 and the Dow Jones Industrial Average, roared higher implicit the past 2 years, delivering double-digit yearly gains. And the momentum continued into this twelvemonth arsenic investors piled into high-growth companies progressive successful blistery technologies specified arsenic artificial quality and quantum computing -- until recently.

Over the past fewer weeks, a driblet successful user assurance successful February and a weaker-than-expected jobs study fueled uncertainty astir the system and the imaginable effect connected firm earnings. And investors besides disquieted astir the interaction of definite moves from President Trump -- for example, the motorboat of tariffs connected imports from Mexico, Canada, and China. Trump introduced the tariffs aboriginal past week, though helium delayed them by 1 period connected items covered by the United States-Mexico-Canada Agreement.

As a result, immoderate of the strongest maturation stocks, from Nvidia (NASDAQ: NVDA) to Amazon, person seen their shares tumble and past week dragged the tech-heavy Nasdaq into correction territory. This downturn whitethorn marque you wonderment whether you truly should beryllium buying stocks close now. Before deciding, though, present are 3 things each capitalist should cognize astir the Nasdaq correction.

The Nasdaq entered a correction connected March 6, falling much than 10% from a highest connected Dec. 16, though it showed signs of betterment during the adjacent trading session, ending the week down by 9.8% from that point. (For an scale to beryllium considered successful correction territory, it indispensable autumn by 10% to 20% from its astir caller high.)

It's excessively aboriginal to accidental whether this correction play volition last, but here's a affirmative constituent to support successful mind: History shows america that corrections mostly person led to affirmative performance. Of 11 Nasdaq corrections since 2010, 10 person resulted successful affirmative show successful the 12 months to follow, and the mean yearly summation has been much than 21%. Of course, past doesn't ever repetition itself, but astatine slightest this inclination shows america corrections don't needfully mean a bigger driblet is conscionable ahead.

No investors similar seeing stocks successful their portfolio tumble. But determination is 1 affirmative constituent astir a marketplace correction, and that's the accidental to adhd to immoderate of your favourite positions, perchance for a bargain -- and find caller buying opportunities, too.

Though we each loved seeing stocks soar successful caller times, the downside was that valuations of galore players took off, too. We tin usage prices of S&P 500 stocks arsenic an example, and 1 of the champion ways to bash this is by looking astatine the Shiller CAPE ratio. This metric considers banal prices and net per stock implicit a 10-year play to set for fluctuations successful the economy.