The Nasdaq 100 officially entered correction territory on Friday, having fallen more than 10% from its peak, marking a significant decline for the index, which is now at its lowest level in approximately five months. On that day, the index dropped over 1%, settling around 23,296, compared to its all-time high of 26,119 reached in October.
Several factors have contributed to the Nasdaq's downturn this year, including concerns surrounding the artificial intelligence sector, a sell-off in memory stocks, and geopolitical tensions stemming from the war between the U.S. and Israel and Iran. This conflict has led to rising oil prices, which analysts fear may exacerbate inflation and hinder economic growth during a period of slowing economic activity in the U.S.
Market performance was similarly negative for other major indexes on Friday, with the S&P 500 down 0.9% and the Dow Jones Industrial Average also experiencing a 0.9% decline. The Nasdaq's situation appears increasingly precarious as it approaches a "Death Cross," a technical indicator suggesting potential further losses if the 50-day moving average falls below the 200-day moving average.
As tensions in the Middle East escalate, investor sentiment has turned cautious. Joe Mazzola from Charles Schwab noted that major indexes are currently on track for a fifth consecutive week of losses, a trend not seen since the challenging market conditions of 2022. The outlook for stocks appears contingent on a decline in oil prices to stabilize the market. Currently, the Nasdaq is poised for its 10th losing week in 11, reflecting a prolonged period of decline that has only been observed in a few instances throughout its history.