Nasdaq-100 Enters Correction as Tech Stocks Slide

The index has fallen 10% from its recent peak, its third correction of the year, as investors rotate out of technology shares.

Updated on Nov. 2, 2026 in Investing

Nasdaq-100 Enters Correction as Tech Stocks Slide

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The Nasdaq-100 fell 10% from its most recent peak, entering its third technical correction of the year. The decline followed disappointing earnings reports and investor rotation into other sectors.

Why it matters

The slide marks the Nasdaq-100's worst monthly performance since March 2025 and reflects a shift in where investors are placing capital. Both the Nasdaq-100 and the equally weighted S&P 500 had historically moved together during past sell-offs, making this divergence notable.

The Nasdaq-100 is down 10% from its most recent peak, its worst month since March 2025, while S&P 500 profit growth slowed from 32% to 26% year over year in the third quarter, compared with a typical historical range of 8-12%. The stub does not indicate how long the correction will persist.

The players

Morgan Stanley

A global investment bank and financial services firm whose equity research team projects that the market will resume steady gains after the correction runs its course.

Wells Fargo

A major U.S. multinational financial services company whose research unit tracks corporate profit trends, including the third-quarter slowdown in S&P 500 profit growth.

The details

Investors sold shares in technology companies following disappointing earnings and expectations of a Democratic midterm victory, reallocating into firms positioned to benefit from U.S. economic strength or high oil prices. Prediction markets Kalshi and Polymarket put Democratic midterm odds at 70%.

- October 2026: Widest divergence between the equally weighted and standard S&P 500 since April 2009, and worst Nasdaq-100 month since March 2025.
- Third quarter 2026: S&P 500 profit growth slowed from 32% to 26% year over year.
- November 2, 2026: Correction reported.

Market Dynamics

Unlike prior sell-offs in which the Nasdaq-100 and the equally weighted S&P 500 fell together, this correction shows the two indices diverging, with the widest gap since April 2009. The split suggests capital is rotating within the market rather than exiting it broadly.

Investors holding Nasdaq-100 exposure have absorbed a 10% drawdown from the recent peak, and portfolios weighted toward technology have been affected more than broad-market allocations. Those allocations should be reviewed against individual risk tolerance and time horizon.

The takeaway

A correction that splits the Nasdaq-100 from the broader S&P 500 is a reminder that index-level diversification does not fully protect against sector-specific declines. Investors should check how concentrated their holdings are in technology.