Don’t worry about trapping investors into losing money! Experts sort out the past 10 experiences and reveal the critical time for rebound

The Nasdaq Composite fell sharply on Thursday and officially entered correction territory. However, historical experience shows that selling pressure may further intensify in the short term, but a rebound usually begins after three months.

"CNBC" reported that the Nasdaq Composite Index, which is dominated by technology stocks, plunged more than 5% on Thursday to close at 24,315 points, down more than 11% from the all-time high set last month. Wall Street defines a correction as a decline of more than 10%, and a retracement of 20% would qualify as a short market.

However, looking back at the 10 correction events in the past 10 years, the stock market selling pressure in 2025, 2022, 2020 and 2018 all intensified within one month after the correction occurred. However, except for that time in 2022, the Nasdaq index in these cases has resumed its rise six months later.

Overall, the Nasdaq rose an average of 9.41% in the next three months and an average of 17.03% in the six months from its correction low.

The January 2022 correction was the only one to bring more severe consequences. The Nasdaq fell another 18.3% in the next six months, and a year later it fell 24.3%.

The report mentioned that the trigger for this revision was the Democratic Party's sweep of the House of Representatives and the Senate in the midterm elections held on Tuesday. The Democratic Party also made significant gains in Texas, with Gina Hinojosa, who advocated an immediate moratorium on data center development, winning the gubernatorial election.

Investors are currently assessing whether stricter restrictions at the state government level may slow down the construction of data centers, thereby putting pressure on companies related to artificial intelligence (AI) topics.

Frank Cappelleri, founder of CappThesis, used the past several midterm election cycles as a reference and found that historical experience also shows that the market may face greater volatility in the short term. He also pointed out that in all but one of the 13 midterm election cycles since 1974, the Nasdaq rose in the 12 months after the election. "But it should be noted that the market trend process can be quite volatile."

Cappelleri pointed out that in 2018, as an example, after the Democrats won the House of Representatives, the Nasdaq index rebounded the next day. A wave of sharp selling followed in December, but he said the index was still up about 15% a year after the election.