Yahoo Finance The 5 craziest moments in Dow's 125-year history
The Dow Jones Industrial Average (^DJI) is 125 years old today. It made its debut back on May 26, 1896, and while the S&P 500 index may have stolen much of its thunder as a benchmark for “the market,” it still is very much the main index for many people.
Nowadays, it’s a price-weighted index of 30 blue-chip American companies, but it used to be only 12. None of the 12 original members of the Dow are in the index today. Most, like American Cotton Oil, American Sugar, American Tobacco, U.S. Rubber, are not around anymore, either absorbed by other companies, evolved into a successor company, or simply liquidated. Only General Electric and Laclede Gas are still around, with GE being the last of the original components in the index before it was kicked out in 2018.
If you zoom out, the Dow has gone up and to the right over time, representing the evolution of the American economy, reflecting the progress of the American economy, but also the setbacks along the way.
Some of the wildest moments stand out among the others — five days in particular. (None of them is Black Tuesday, which doesn’t make the top five biggest-move days of the Dow because the full market crash momentum was spread out over the Monday as well.)
October 30, 1929: 12.34% gain
This date might confuse some people, because 1929 is the year associated with a horrible crash that led to the Great Depression. This was not a happy day, it was the Wednesday after Black Tuesday.
This was likely the original dead-cat bounce. The market had crashed 12.82% on Monday, Oct. 28, and 11.73% on Tuesday, Oct. 29, after rampant speculation caused an enormous sell-off as the stock fever broke. This gain was a bigger move than either of the previous two days, though no one remembers it, since the market began to tank yet again the following Thursday, cementing what must be the wildest week in Wall Street history.
March 16, 2020: 12.93% drop
The full scope of the coronavirus pandemic and associated economic shutdown sent stocks into freefall. (It also priced in the future gains incredibly early as well.) During the rollercoaster of the pandemic’s early days, things got historic, with numerous big jerks up and down the stock chart. This was the largest single-point drop in history for the Dow, which fell 2,997.10.
On March 16, the Federal Reserve cut its benchmark interest rate to 0%-0.25% and President Donald Trump pivoted to finally say the coronavirus might be a big problem that could cause peoples’ lives to change.
October 6, 1931: 14.87% gain
This was a big day for the U.S. Al Capone was put on trial for tax evasion and the market boomed as the banking system, battered by the Great Depression, had an infusion of confidence from President Hoover, who proposed some sweeping banking changes. This was by no means the end of the Depression, but another reminder that the best market days can happen in the worst times and vice versa.
March 15, 1933: 15.34% gain
The greatest percent gain in Dow history came amid significant pent-up demand – the stock market had been closed for 11 days previously as a “bank holiday” so that the FDR administration and Congress could stop the Depression. Just a week before, the Emergency Banking Act was passed and, then Americans were starting to put cash back into banks when they opened.
This first day back, though, represented by a huge gain, was not a particularly wild day on the floor. Eyewitness accounts reported a "ghost town." FDR was trying to restore confidence in the economy and had started his fireside chats just a few days before.
October 19, 1987: 22.61% drop
You might know this day as Black Monday. It was the worst day in Dow history, and the 22.61% fall didn’t just crater U.S. markets, but the entire world’s. Like many things in the stock market, it was driven by emotion and panic, and the market gained back half of its loss over the next few days. Thanks to the Fed (among other things), there wasn’t a prolonged depression, though it took two years to fully recoup the losses.
(Some people, including the current owners of the Dow, S&P Global, cite December 12, 1914, as the worst day in the Dow, using old calculations. But this isn’t true as historical reports indicate. This was the day the market reopened after being shuttered due to WWI for six months.)
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Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.
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