Nasdaq in ‘correction territory’: What does that mean?

As Wall Street prepares to open on Monday, many report that the Nasdaq is in correction territory. But what exactly does this mean? The phrase explains a rapid decrease in an index value, typically over 10 percent, in a short amount of time. Additionally, a decrease must be compared to a recent high, not just a sudden decrease from a stagnant position.

What does it mean that the Nasdaq is in correction territory?

Well, in basic terms, we know that on July 10, the index hit its highest level ever recorded at over 18,600 points, and since then, it has been tumbling. Over the last month, the index has lost -8.59% of its value. However, Nasdaq futures have lost an additional 2.43% since trading was last open, which places it in correction territory as it has lost more than 10 percent in less than a month.

As trading is set to begin, the value of the stock market is expected to fall, particularly after the events in Japanese markets earlier today, which had one of their worst days since the 1980s when the Asian economy entered a period of deep recession.