The Nasdaq-100 Had Its Worst Week in 18 Months. History Says the Following Year Has Usually Been Strong.

The Nasdaq-100 fell about 5.5% in the week ending Oct. 16. The Invesco QQQ Trust (NASDAQ:QQQ), the exchange-traded fund that tracks the index, dropped around the same amount. That was the index's worst week since the one ending April 4, 2025, when it lost almost 10%.

Chip stocks did a lot of the damage. The VanEck Semiconductor ETF fell around 10% that week, its largest weekly drop since April 2025, while other stocks linked to artificial intelligence (AI) slid, too.

Investors also worried about how much tech firms are borrowing to cover AI-related capital spending, and hotter-than-expected inflation numbers and oil over $100 a barrel added to the pressure.

I wanted to see what QQQ did in the year after weeks like this one, so I dug through its daily prices, which begin in 1999. As I write this, the fund trades near $724, or about 5% under its record close of about $760 on Oct. 6.

Image source: Getty Images.

QQQ nearly always climbed over the next year

To stop one bad spell from being counted several times, I only counted the first week with a loss of 4% or more in any 30-day window. Since 2010, 26 of these weeks have had a full 12 months to play out. (Two other drops in 2026, in June and July, are too recent to score.)

QQQ was higher a year later after 25 of the 26. The median gain was around 22%, based on price alone, before dividends. The latest case, the week that ended April 4, 2025, was followed by a gain of about 38% in the next year. And in late February 2020, when the pandemic spread, QQQ lost about 11% in a week and then climbed about 53% in the following year.

Of course, QQQ, which is loaded with growth stocks, has risen in most years since 2010 whatever sort of week came before. Taking any week since 2010 at random, the fund ended the next 12 months up in around nine out of 10 cases, with a median gain near 21%.

In other words, those bad weeks were usually followed by an ordinary year for QQQ. And an ordinary year for the fund has been a pretty good one since 2010.

The 2022 exception

The only miss was in early 2022. QQQ dropped around 4.5% in the week ending Jan. 7, 2022, and a year later it was down around 29%.

That week turned out to be early in a long slide. The Federal Reserve started lifting its benchmark interest rate from near zero in March 2022, and by December, its target range was 4.25% to 4.5%. Higher interest rates can drag on stock valuations, especially for firms whose profits are expected to come years from now. The Nasdaq-100 dropped around 33% that year, its worst calendar year since 2008.

The record since 2010 has a weak point, then, and it's arguably the most important one. A bad week can end up being the beginning of a bear market.

What do the dot-com years add?

But the record looks far less reassuring once it stretches back to QQQ's launch in 1999. Of 71 qualifying weeks with a year-later result, 47 were followed by a gain, or about two-thirds.

Most of the gap comes from the dot-com bust. QQQ had 18 qualifying weeks from January 2000 through mid-2002, and none was followed by a gain over the next 12 months.

The Nasdaq-100 lost more than 30% every calendar year from 2000 through 2002, as many tech companies that had surged in the late 1990s gave back much of their gains. Outside that span, the fund was higher a year later after 47 of 53 drops. Five of the other six misses were in 2007 and 2008, around the financial crisis, and the sixth was 2022.

Because the drops bunched up like that, the full record also lags the fund's typical week. Since 1999, QQQ was higher a year later after about 78% of all weeks, versus about 66% after these drops.

But it's too soon to tell if the week that ended Oct. 16 was a brief scare or the start of a longer slide.

In the end, I wouldn't sell a Nasdaq-100 fund over one bad week. Since 2010, drops like this have probably shown investors more about the market's mood than the coming year. But bad weeks also stacked up early in the dot-com bust and around the 2008 financial crisis, so a single year isn't always enough time to break even.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.