The Nasdaq Composite dropped 2.4% on Thursday, leaving the tech-heavy index down nearly 11% from its record-high close on October 29 and confirming it has been in a correction since then.
In a broad Wall Street selloff fuelled by uncertainty about the U.S. and Israeli war with Iran, the Nasdaq in recent days has suffered its worst decline since April 2025, when U.S. President Donald Trump's "Liberation Day" global tariff announcement sent global markets into a tailspin.
Many investors define a correction as a decline of at least 10% in a stock or index from its previous peak, with the peak defining the beginning of the correction.
Tech stocks vulnerable
The Nasdaq's newest correction signals heightened volatility for investors and highlights the vulnerability of tech stocks, including Microsoft, Alphabet and Nvidia, that have surged in recent years due to optimism about AI technology.
With the selloff driven by fears the Middle East conflict will cripple the global economy, investors are weighing whether the downturn is a temporary dip, similar to the recovery that followed the 2025 selloff, or the start of a sustained period of risk tied to the war, inflation fears and worries about the pace of massive investments in artificial intelligence.
"This back-and-forth movement is enough to make people seasick. You think you know what is going to happen, make a change in your trading or portfolio, and you get punched in the face the next day when the market moves in the opposite direction," said Jim Carroll, senior wealth adviser and portfolio manager at Ballast Rock Private Wealth.
The Nasdaq fell almost 23% from its 2024 record-high close through April 7, 2025, before recovering and rallying to record highs through last October.
The index is down nearly 8% in 2026 and at its lowest level since early September 2025.
Meta weighs down Nasdaq
Among the biggest weights on the Nasdaq on Thursday was Meta Platforms, dropping 8% after two verdicts holding it liable for harm to young users sparked fears the social media company may have to overhaul its sprawling advertising business.
Strong gains in AI-linked technology stocks in recent years have led to their increased concentration in the Nasdaq and S&P 500, increasing the risk that a pullback in those Big Tech stocks could cause sharp index declines.
Many of these heavyweights bore the brunt of Thursday's market tumble. Nvidia slid 4.2%, Alphabet fell 3.4% and Tesla lost 3.6%. The Roundhill Magnificent Seven exchange-traded fund dropped 3.3%, extending its decline since the Nasdaq’s October 29 high to 17%.
While Thursday’s selloff centered on the war in Iran and the potential for high oil prices to fuel inflation, investors are also worried that heavy spending on AI infrastructure by Microsoft, Alphabet, Amazon and others may be taking longer than expected to pay off with increased revenue and profits.
“I’m not freaking out that this particular index is in correction territory, but it’s true that across the board, we’re seeing lower lows and lower highs. There definitely has been an erosion in market enthusiasm since hostilities broke out, and it’s unrealistic to expect that to reverse itself overnight, even if the conflict ends tomorrow," said Steve Sosnick, market strategist at Interactive Brokers in Greenwich, Connecticut.
(Reporting by Noel Randewich in San Francisco; additional reporting by Suzanne McGee in New York; Editing by Mark Porter, Rod Nickel, Colin Barr)
Copyright (2026) Thomson Reuters.
This article was written by Noel Randewich from Reuters and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.