Nasdaq Correction: 9 of Last 10 Cases Recovered. Will the Fed Break the Pattern?

The Nasdaq Composite slipped 5.52% to 24,315 on Thursday, entering correction territory. A selloff in chip stocks drove the decline following Democratic victories in Congress and key data-center-state governor races.

The index ended the session roughly 12% under the October 6 all-time high. Corrections in the past have typically reversed, but the path upward may be blocked by the Federal Reserve (Fed).

What History Shows for Nasdaq Corrections

In the recent past, Nasdaq corrections have healed in most cases. Data from CNBC indicates that half a year on, the index was up in nine out of the prior 10 instances.

If you take the first close inside correction territory as the starting point, the six-month average return across the 10 examples comes to 17.03%.

In four of the 10 episodes, the index posted a loss in the first month. Back in March 2025, the index slid 13.73% in the month that followed, yet it was up 20.1% six months out.

The sole exception was January 2022. Six months out, the index sat 18.32% lower, and it was down 24.32% a year on.

The central bank's policy track goes a long way toward explaining the 2022 anomaly.

Fed Playbook: Pausing Like 2018 or Tightening Like 2022?

Four rate increases were delivered by the central bank in 2018, the last one arriving in December. The correction of October 2018 turned around once the Fed gave notice of a pause in January 2019.

The central bank continued its tightening cycle in 2022, raising the cost of borrowing seven times over those twelve months. Over the current year, the Fed raised its target range to 3.75%–4.00% in September, the first increase since 2023.

The rate-setting body stood pat in October, though Governor Lisa Cook and Cleveland Fed President Beth Hammack cast their votes for a further quarter-point rise.

Market participants continue to expect a rate rise in December, although they are less certain than a few days back. The CME FedWatch tool on Thursday pegged the chance of a December move at 68.1%, a drop from the previous day's 82.7%.

An equity market that is dropping might execute part of the mission for the Fed. That case was put earlier this month by BMO Capital Markets economist Jennifer Lee, as BeInCrypto relayed.

Both outlooks face a test on Friday with the October employment figures. The consensus among economists, per FactSet, is for 65,000 new positions and unemployment of 4.2%. A print that comes in hot could solidify the wagers on a December rise.

The identical Fed riddle confronts holders of Bitcoin (BTC), after the token tumbled in Thursday's tech rout. The choice the Fed makes on December 9 could reveal whether it tightens further, mirroring 2022, or stays put, as it did in early 2019.