Five of the Most Important Drops In the History of the Nasdaq Stock Exchange

Like any other exchange in the world, the Nasdaq has seen its share of incredible highs and depressing lows. At this moment in time, investor confidence may be the lowest it has ever been for a very long time. The bailout did not pass the House of Representatives, and many investors across the world are left to wonder - what next?

I've compiled a list of five of the biggest one-day declines in the history of the Nasdaq. These aren't necessarily the biggest one-day declines in terms of total points - the Nasdaq had a number of several hundred point drops once the dot com bubble started deflating in 2000. These are five of the most surprising, alarming and momentous drops in the history of the Nasdaq. Here is the list, in no particular order:

September 29th, 2008 - Minus 199.61 points, -9.14%. After meeting throughout the weekend to hammer out a $700 billion dollar bailout, the House of Representatives voted to reject the bill, sending markets tumbling lower. The markets posted their worst declines in over 20 years, and investors were left reeling. With the House now adjourned until Thursday and markets crashing worldwide, investors are left to wonder how much more damage will be inflicted throughout the rest of this week and into the fall.

April 12th, 2000 - Minus 286.27 points, -7.1%. This is truly the day that the Dot Com bubble burst. The Nasdaq tumbled under the 4000 point mark, never to return. The Nasdaq had been trying to rally after finally losing steam in late March / early April, but the drop below 4000 was a psychological blow that people just couldn't absorb. Soon people would be stampeding out of tech stocks and the Nasdaq would just be a shell of its former self.

October 19th - 20th, 1987 - Minus 79.6 points, -19.6%. In terms of a percentage drop, the stock market crash of 1987 still reigns supreme in terms of the biggest short-term crashes, trumping 9/11 or 2008 or any other period in time. The decline was alarmingly violent and sudden, and left many wondering if the future of capitalism might be at stake. The market would eventually recover, but not without causing a number of heart attacks in the interim.

September 17th, 2001 - Minus 115.83 points, -6.8%. The first day of trading after the September 11th attacks that brought down the World Trade Center towers. Many were left to wonder if the American financial system (and the global network for that matter) would be able to recover. Government officials moved to inject a tremendous amount of liquidity into the markets, dulling the effect of the attack on the markets. Coincidentally, these aggressive measures ended up helping to cause the problems that we are dealing with 7 years later.

August 31st, 1998 - Minus 140.43 points, -8.6%. The height of the crisis in 1998. There was a global recession that was started by the Asian financial crisis in 1997. Russia was collapsing. Long Term Capital Management, a major highly leveraged US hedge fund, was on the brink of collapse. LTCM's collapse would possibly threaten the global financial system, so a number of Wall Street firms (including Goldman Sachs, Merill Lynch and others) banded together to bail the company out. Looking back, this crisis seems to pale in comparison to what we are dealing with today. The Nasdaq went absolutely ballistic in the years following this situation, more than tripling in value in just a few short years.

Filed under: The Economic Meltdown | General Market News | Stock Market Education

COMMENTS

Comment by Dave on October 10, 2008 @ 11:26 am

Four of these five drops instilled a great day of terror in the hearts and minds of average investors. The only one that didn't was the popping of the dot com bubble in 2000.

Sure there were people that were over-leveraged and would ultimately end up decimated by the drop. However, people generally agreed that the dot com bubble was out of control, and when the bubble popped, it certainly didn't come as a surprise to many people.

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