Nasdaq Plunges with Largest One-Day Drop Since 2022: Market Movements and Seasonality Point to Possible Reasons

The Nasdaq just experienced its biggest one-day drop since 2022. Investors are asking why this sudden drop occurred. What has changed in the last 24 hours?

Mainstream news has offered various reasons to justify the drop, such as comments from Trump, geopolitical concerns, etc. However, if we examine market movements and the historical performance during election years, we might uncover some clues.

 1) Markets move in waves. After a wave up, there is always a wave down. 

 2) Look at the left chart. During Election years (since 1950), the market historically falls on the 3rd week of July. 

And Goldman Sachs also points out that this Wednesday, July 17, has historically marked a turning point for returns on the equities benchmark, citing data going back to 1928. And what follows, is August — typically the worst month for outflows from passive equity and mutual funds.