The Nasdaq Just Hit a Correction. Here's How Much of It Is in Your TFSA

If you opened your investing app Thursday night and winced, you were in good company. The Nasdaq Composite fell 5.5% and the S&P 500 dropped nearly 4.4%, its worst day since April 2025, according to The Globe and Mail. The Nasdaq is now down 11.9% from its October 6 high, which officially puts it in correction territory.

Here is the part that matters if you are in your twenties or thirties and holding a single all-in-one ETF in a TFSA. You probably own a lot more of this selloff than you think.

What actually happened on Thursday?

Chip stocks cracked. Nvidia fell 9.4%, per the Globe, and Reuters reported that AMD slumped 15% as the Philadelphia semiconductor index hit its lowest level in more than six months, in coverage carried by the Globe. The iShares Semiconductor ETF lost 12%, its worst day since the COVID crash of March 2020, CNBC reported.

Nasdaq 100 stocks shed roughly US$1.8 trillion in value and wiped out Wednesday's post-election rally, according to Semafor. Reuters had put the intraday hit above US$2 trillion, so the exact figure depends on whose snapshot you use.

The trigger, per CNBC, was investor fear that the Democratic sweep in Tuesday's US midterms could slow data center construction. Underneath that sits a bigger worry about AI spending. "We expect that the AI boom will remain on track," JPMorgan analysts wrote, as quoted by Semafor, "but may become costlier, slower, and more consolidated in the coming years."

How much US tech is hiding in a typical Canadian portfolio?

Take XEQT, iShares' all-equity, one-ticket ETF portfolio. As of November 4, the fund's look-through holdings were 44.86% US stocks and 24.42% Canadian stocks, according to BlackRock's product page. Its three biggest underlying positions were Apple at 3.06%, Nvidia at 2.91% and Microsoft at 2.48%, and information technology was the largest sector at roughly a fifth of the fund, based on the holdings file published there.

So a "globally diversified" fund still leans hard on a handful of American tech giants. That is how market-cap indexes work. The biggest companies get the biggest weights, and right now the biggest companies are AI companies.

The math on one stock is modest, though. Nvidia at about 2.9% of the fund, falling 9.4%, works out to a hit of roughly a quarter of a percentage point to the whole portfolio. The pain on Thursday came from everything falling at once. Every sector in the S&P 500 declined, the Globe reported, and the seven biggest tech names made up nearly 35% of that index's value last month.

A Nasdaq 100 tracker is a much more concentrated bet. Reuters had the Nasdaq 100 down 5.9% late in the session, a drop that funds following it would have absorbed almost entirely.

Did the TSX hold up any better?

Somewhat. The S&P/TSX Composite fell 736.13 points, or 2.03%, to close at 35,605.27, according to Investing.com. That is less than half the Nasdaq's drop, partly because Canada's index is heavy on banks, energy and miners rather than chipmakers.

Canada does have its own AI hardware story, and it got hit hard. Celestica, the Toronto electronics maker that has ridden demand for AI data center gear, fell more than 12% and led the tech selloff, per Investing.com. Every TSX sector except communications services finished lower, the Globe reported.

That 24% Canadian slice in a fund like XEQT acted like a partial cushion. It just was not a wall.

Is a correction something to panic about?

History says probably not, though the short term can get uglier. Across 10 Nasdaq corrections over the past decade, the index gained an average of 9.41% over the following three months and 17.03% over six months, CNBC found. The exception was 2022, when the Nasdaq lost another 18.3% over the next six months.

Chart analyst Frank Cappelleri of CappThesis told CNBC the Nasdaq was higher 12 months after the vote in all but one of 13 midterm cycles since 1974. "The caveat is that the path can be a volatile one," he said.

Not everyone thinks the worst is over. "Despite the magnitude of today's move, volatility has not yet reached the capitulation or contrarian extremes historically associated with capitulation points," said Adam Turnquist of LPL Financial, per Reuters.

Some strategists even see an upside. Ed Yardeni of Yardeni Research wrote before the selloff that "we may be entering an AI Goldilocks zone, with enough restraint to take some air out of the bubble without derailing the boom," the Globe reported.

What are other everyday investors doing right now?

Selling, and fast. "Retail investors are on track for their largest day of selling across single stocks since the Covid crash," Viraj Patel of Vanda Research said in a note, according to Reuters via the Globe. "On a typical sell-off, retail buy the dip. Today, that bid has effectively disappeared from individual names."

That is worth sitting with. One-day drops of this size feel huge in an app that shows you a red number in real time. They look a lot smaller on a 10-year chart.

The useful move is a boring one. Know what you actually own, check whether your mix still matches your timeline and your stomach, and remember that a correction is a normal, recurring part of owning stocks. If you are unsure what that means for your own situation, that is a good question for a fee-only planner.

This article is general information for educational purposes only and is not personal investment advice.