April 21, 2014

9 Largest One-Day Stock Market Losses

Yesterday, the Dow Jones suffered an ever-so-slight correction that ended up being the ninth biggest single-day point loss ever. To commemorate that awesome development, here are the 9 worst one-day points losses in Dow Jones history.

Here’s a good rule of thumb: Anytime an event cracks the top ten of ANYTHING, there’s a decent chance we will be doing a list about it that next day. That’s just the type of up-to-the-minute list-making prowess you get from Oddball Daily. Because you’re worth it. Maybe.

9. August 4, 2011: -513 Points
Yesterday’s tumble, the 9th worst in history, was precipitated by a mass migration from the stock market and commodities into the security of treasury bills. So many people pushed their money to the U.S. government that bond and t-bill yields were actually negative, meaning that investors were paying the U.S. government to hold their money, which is a curious thing. While one could get the same amount of security from putting their money in a bank or a mattress without having negative returns, the likelihood is that investors were willing to take this hit in order to lock into bond prices that would surely (hopefully?) stabilize in the near future. These falls are normally more systematic than random, so don’t be surprised if we see this happen again until the masses can take a deep breath and figure out what exactly is going on.

8. October 22, 2008: -514 Points
As you will see, these lists aren’t chronological, so telling the story in this format proves a bit tricky. Try reading #’s 1, then 5, then 2 to get a better narrative. The tumble that began those days resulted from myriad earnings reports from the third-quarter that made it abundantly clear that things were going to get worse before they got better. Another day in a dramatic collapse that lasted a long, long time.

7. October 27, 1997: -554 Points

American markets may be painfully insulated, but the events of this day demonstrated that, to some extent, our economy is tethered to that of the rest of the world. The long-languishing Asian markets, specifically Hong Kong, scared American investors into dumping stock, so much so that the trading was halted twice and the trading day was shut down early to curb the frenzy of sales.

6. April 14, 2000: -618 Points
This drop actually served more as a correction to the dot-com boom than it did a reaction to any singular event. The economy had been growing so quickly (the long unbroken 10,000 point mark was hit not long before) that the government issued a warning on April 14th that the growth could be leading to inflation, which temporarily hampered investment in the market. A speed bump in what would ultimately become a boom followed by a bust.

5. October 9, 2008: -679 Points
Like so many other solitary economic phenomena, the events of October 9th weren’t that different from those of the 22nd or 15th, but were rather just reflected a collective exasperation from investors. There was no declaration that day, nor a defining moment. A lack of consumer confidence snowballed into one of the largest sell-offs in the market’s history. This was the most active day of trading in Wall Street’s history, fueled entirely by a desire to divorce investments from many companies that would ultimately not weather the storm.

4. December 1, 2008: -680 Points

After weathering the past two months of financial turmoil, the market took yet another huge slide as the Bureau of Economic Research confirmed what everyone else had already assumed: the U.S. had been in a recession since late 2007, and that manufacturing had hit a 26-year low. While this news surprised virtually no one, the confirmation of suspicious were just another in a long list of indicators that investors read to mean “Get out of the market now. Sell.”

3. September 17, 2001: -685 Points
This is perhaps the easiest one to explain. This sell-off came about the first day trading resumed after the September 11th attacks on the World Trade Center and Washington. Mass uncertainty and fear historically leads to a desire to hold more liquid, risk-free assets, such as gold and cash. As such, stocks in airlines and even banks were sold off with abandon as few were willing to roll the dice to see what the near future had in store for the industries affected.

2. October 15, 2008: -733 Points
Sadly, this was just another day in October in 2008, when investors, already trepidatious about insolvency issues among investment banks, responded to word that retail spending was at a 3-year low. Further exacerbating fears was Fed Chair Ben Bernanke’s public declaration would be slow (read: extremely slow).

1. September 29, 2008 -778 Points

This fall precipitated the financial bloodbath that occurred in late 2008 when the housing bubble officially burst, leaving hundreds of firms invested in mortgage backed securities holding the back when lax lending policies left financial institutions susceptible to defaults. The exact event that triggered this one-day loss was when the U.S. House of Representatives rejected a $700 billion bailout plan, leading investors to believe that many of the companies in which they held stock wouldn’t weather the storm, causing them to lose confidence and sell off in record numbers.