When Did the Stock Market Crash?
Stock Market Crashes, Corrections, and Dips in History
- On March 9, the Dow fell 2,013.76 points to 23,851.02, a 7.79% drop.
- On March 12, it fell a record 2,352.60 points to close at 21,200.62. It was a 9.99% drop, almost a correction in a single day.
- On March 16, the Dow lost 2,997.10 points to close at 20,188.52. That day’s point plummet and 12.93% freefall topped the original October 1929 Black Monday slide of 12.8% for one session.
Prior to the 2020 crash, the Dow had just reached its record high of 29,551.42 on Feb. 12. From that peak to the March 16 low, the DJIA lost 9,362.90 points, or 31.7%. It surpassed the 20% decline that signaled the start of a bear market.
A crash is a severe point and percentage drop in a day or two of trading. It is marked by its suddeness. A stock market correction is a more gradual decline that's at least 10 percent off the 52-week high. When prices fall 20 percent, it becomes a bear market.
How does the recent crash compare to other declines, dips, and crashes? Here is a review of the top downturns since 1929.
The stock market crash of 1929 kicked off the Great Depression. Over four days, share prices fell 25 percent. It began on October 24, 1929 which is now called Black Thursday. Stock prices fell 11 percent. These then recovered as 12.9 million shares of stock were sold. This was triple the usual amount. Trading on Friday seemed back to normal. But the market dropped another 13 percent on Black Monday. This occurred despite the bankers' attempts to stop the panic. The next day, Black Tuesday, the market fell another 11 percent. The loss of confidence in Wall Street helped kick off the Great Depression. The Dow didn't regain its pre-crash level until November 23, 1954.
Black Monday, the crash of 1987, occurred on October 19,1987. The Dow dropped 20.4 percent which is the largest one-day percentage loss in stock market history. It took two years before the market returned to pre-crash levels. The crash followed a 43 percent increase earlier that year.
Three factors caused it. First, traders worried about anti-takeover legislation moving through Congress. Second, foreign investors started selling when the Treasury secretary announced he might let the dollar's value fall. Third, quantitative trading programs worsened the losses. Aggressive Federal Reserve monetary policy prevented the crash from causing a recession.
The Asian financial crisis occurred on October 27, 1997. The Dow dropped 554.26 points in response to a 6 percent decline in Hong Kong’s Hang Seng index. Investors were reacting to a currency devaluation throughout Asia. Russia followed devalued its currency and defaulted on its bonds. The fall in the stock market helped trigger the Long-Term Capital Management crisis.
The dot-com crash occurred in the NASDAQ starting in March 2000. The tech index reached a peak of 5,048.62 on March 10, 2000. On April 3, it fell 7.6 percent, or 349.15 points. It fell 7.1 percent on April 12, 9.7 percent on April 14, and 7.2 percent on April 18. It also had significant declines on May 30 (7.9 percent), October 13 (7.9 percent), and October 19 (7.8 percent). The worst crash of the year was on December 5, when it fell 10.5 percent. On December 20, it declined 7.1 percent. The NASDAQ ended the year at 2,470.52, losing 51.1 percent of its value from its peak.
The dot-com crash was caused by investors who created a bubble in high-tech stock prices. They thought all tech companies were guaranteed money makers. They didn't realize that tech's corporate profits were caused by the Y2K scare. Companies bought new computer systems to make sure their software would understand the difference between 2000 and 1900. Back in those days, only two date fields were needed and not the four required to differentiate the two centuries. The book, Irrational Exuberance, became famous because it explained the herd mentality that created the stock tech bubble in 2000.
After the 9/11 attacks, the markets closed for four days.When they reopened on September 17, 2001, the Dow fell 685 points. It was 7 percent decline. The economy had entered the 2001 recession in March. Threats of war kept the Dow down until 2002.
The market crash of 2008 began with the Dow's 777.68-point drop on September 29, 2008. At that time, it was the biggest point drop in the history of the New York Stock Exchange. It fell from 11,143.13 to 10,365.45, a 7 percent decline. Investors panicked when the Senate voted against the bailout bill. Without government intervention, other banks would follow Lehman Brothers into bankruptcy. The Dow lost more than 50 percent of its value between its 2007 peak and its bottom in March 2008,
The Dow fell 680 points on December 1, 2008. It was a 8 percent drop, from 8,829.04 to 8,149.09. Investors reacted to the National Bureau of Economic Research report that said the recession had begun 11 months earlier.
A flash crash occurred on May 6, 2010. During intra-day trading, the Dow plummeted 998 points in just a few minutes, a 9 percent drop. A technical malfunction occurred when quantitative trading programs shut down for no apparent reason. The crash revealed how vulnerable the markets are to computer glitches. Analysts blamed the crash on new fears about the Greek debt crisis.
On August 24, 2015, the Dow fell 1,089 points in early trading. It was a 6.6 percent decline. The index ended the day down 588 points. Investors panicked when oil prices dipped below $40 a barrel. They were afraid such low prices would reduce earnings for companies that sell oil.
In February 2018, the Dow dropped 2,270.96 points in three trading days. On February 5, it lost 1,175.21 points by the end of the day, the biggest point loss in history. It had plummeted 1,600 in intra-day trading. Many felt that it was computer programs run amok. Bloomberg's Sarah Ponczek reported how"...an orderly selloff snowballed, taking the Dow from down about 700 points to down a whopping 1,600. It quickly recovered." Despite all that, it was a 8.5 percent decrease, not quite a crash.
The Dow recovered the next two days, but plunged 1,032.89 points on February 8. By the end of the day, the Dow was down 10.4 percent from its record close of 26,616.71 on January 26, 2018. Since it took almost two weeks to fall, it's not quite a crash. But, since it's 10 percent below the high, it is a correction. Investors are worried about the effects of rising interest rates on the economy and on the national debt.
S&P Dow Jones Indices. “DJIA Daily Performance History, “ Download DJIA Daily Performance History. Accessed March 17, 2020.