Thoughts on stock market corrections

Six corrections in this bull market
Nasdaq Composite Index level, with correction start dates and percentage declines

Source: Bloomberg, as of November 11, 2026. Note: The early 2025 drawdown was more than 20%, but given its brevity and quick recovery, more closely resembles a correction rather than a bear market.

A stock market correction is commonly defined as a 10% to 20% drawdown from a previous high. A sustained decline of more than 20% is typically considered a bear market. While a correction is significant and can be unnerving for investors, it is also a normal part of the equity market cycle.

The Nasdaq Composite Index, widely followed for its technology-focused composition, is a case in point. The current bull market began about four years ago, and the Nasdaq has posted a cumulative total return of more than 150% over that period. However, as the chart shows, this bull market has been interrupted six times by corrections, including one earlier this month. Even so, these have proven to be short-lived setbacks within a broader upward trend.

Corrections are a reminder that the stock market’s higher long-term returns come with risks, including volatility. Eventually, a correction will turn into a full-blown bear market; that, too, is a normal part of the market cycle. So far, however, selling during any of the six Nasdaq corrections in this bull market would not have been a fruitful strategy.

What we’re watching this week

Tuesday: Nvidia reports fiscal third-quarter results. The technology bellwether has experienced significant volatility in recent weeks, including last week’s resignation of CEO and co-founder Jensen Huang.

Friday: Minutes from the October 28 FOMC meeting will be released. The committee voted to leave its policy rate unchanged, though there were two dissents in favor of a rate hike.

Throughout the week: Reports on the sluggish housing market are due, including the NAHB Housing Market Index for November and housing starts and building permits for October.