Tulip Mania Tulip Mania (1634–1637), in which some single tulip bulbs allegedly sold for more than 10 times the annual income of a skilled
artisan, is often considered to be the first recorded
economic bubble.
Panic of 1907 In 1907 and in 1908, stock prices fell by nearly 50% due to a variety of factors, led by the manipulation of
copper stocks by the
Knickerbocker Trust Company. Shares of
United Copper rose gradually up to October, and thereafter crashed, leading to panic. Several investment trusts and banks that had invested their money in the stock market fell and started to close down. Further bank runs were prevented due to the intervention of
J. P. Morgan. The panic continued to 1908 and led to the formation of the
Federal Reserve in 1913.
Wall Street Crash of 1929 The economy grew for most of the
Roaring Twenties. It was a technological golden age, as innovations such as the radio, automobile, aviation, telephone, and the
electric power transmission grid were deployed and adopted. Companies that had pioneered these advances, including
Radio Corporation of America (RCA) and
General Motors, saw their stocks soar. Financial corporations also did well, as
Wall Street bankers
floated mutual fund companies (then known as
investment trusts) like the
Goldman Sachs Trading Corporation. Investors were infatuated with the returns available in the stock market, especially by the use of
leverage through
margin debt (i.e., borrowing money from your stockbroker to finance part of your purchase of stocks, using the bought securities as collateral). On August 24, 1921, the
Dow Jones Industrial Average (DJIA) was at 63.9. By September 3, 1929, it had risen more than sixfold to 381.2. It did not regain this level for another 25 years. By the summer of 1929, it was clear that the economy was contracting, and the stock market went through a series of unsettling price declines. These declines fed investor anxiety, and events came to a head on October 24, 28, and 29 (known respectively as
Black Thursday,
Black Monday, and
Black Tuesday). On Black Monday, the DJIA fell 38.33 points to 260, a drop of 12.8%. The deluge of selling overwhelmed the
ticker tape system that normally gave investors the current prices of their shares.
Telephone lines and telegraphs were clogged and were unable to cope. This information vacuum only led to more fear and panic. The technology of the New Era, previously much celebrated by investors, now deepened their suffering. The following day, Black Tuesday, was a day of chaos. Forced to liquidate their stocks because of
margin calls, overextended investors flooded the exchange with sell orders. The Dow fell 30.57 points to close at 230.07 on that day. The glamour stocks of the age saw their values plummet. Across the two days, the DJIA fell 23%. By the end of the weekend of November 11, 1929, the index stood at 228, a cumulative drop of 40% from the September high. The markets rallied in succeeding months, but it was a temporary recovery that led unsuspecting investors into further losses. The DJIA lost 89% of its value before finally bottoming out in July 1932. The crash was followed by the
Great Depression, the worst
economic crisis of modern times, which plagued the stock market and Wall Street throughout the 1930s.
October 19, 1987 (19 July 1987 through 19 January 1988) The mid-1980s were a time of strong economic optimism. From August 1982 to its peak in August 1987, the
Dow Jones Industrial Average (DJIA) rose from 776 to 2722. The rise in market indices for the 19 largest markets in the world averaged 296% during this period. The average number of shares traded on the
New York Stock Exchange rose from 65 million shares to 181 million shares. The crash on October 19, 1987,
Black Monday, was the climactic culmination of a market decline that had begun five days before on October 14. The DJIA fell 3.81% on October 14, followed by another 4.60% drop on Friday, October 16. On Black Monday, the DJIA plummeted 508 points, losing 22.6% of its value in one day. The
S&P 500 Index dropped 20.4%, falling from 282.7 to 225.06. The
NASDAQ Composite lost only 11.3%, not because of restraint on the part of sellers, but because the
NASDAQ market system failed. Deluged with sell orders, many stocks on the NYSE faced
trading halts and delays. Of the 2,257 NYSE-listed stocks, there were 195 trading delays and halts during the day. The NASDAQ market fared much worse. Because of its reliance on a "market making" system that allowed
market makers to withdraw from trading, liquidity in NASDAQ stocks dried up. Trading in many stocks encountered a pathological condition where the
bid price for a stock exceeded the
ask price. These "locked" conditions severely curtailed trading. On October 19, trading in
Microsoft shares on the NASDAQ lasted a total of 54 minutes. The crash was the greatest single-day loss that Wall Street had ever suffered in continuous trading up to that point. Between the start of trading on October 14 to the close on October 19, the DJIA lost 760 points, a decline of over 31%. In October 1987, all major world markets crashed or declined substantially. The
FTSE 100 Index lost 10.8% on that Monday and a further 12.2% the following day. The least affected was Austria (a fall of 11.4%) while the most affected was Hong Kong with a drop of 45.8%. Out of 23 major industrial countries, 19 had a decline greater than 20%. Despite fears of a repeat of the
Great Depression, the market rallied immediately after the crash, posting a record one-day gain of 102.27 the very next day and 186.64 points on Thursday, October 22. It took only two years for the Dow to recover completely; by September 1989, the market had regained all of the value it had lost in the 1987 crash. The DJIA gained 0.6% during calendar year 1987. No definitive conclusions have been reached on the reasons behind the 1987 Crash. Stocks had been in a multi-year bull run and market
price–earnings ratios in the U.S. were above the post-war average. The
S&P 500 was trading at 23 times earnings, a postwar high and well above the average of 14.5 times earnings.
Herd behavior and psychological
feedback loops play a critical part in all stock market crashes but analysts have also tried to look for external triggering events. Aside from the general worries of stock market overvaluation, blame for the collapse has been apportioned to such factors as
program trading,
portfolio insurance and
derivatives, and prior news of worsening
economic indicators (i.e. a large U.S. merchandise
trade deficit and a falling
U.S. dollar, which seemed to imply future interest rate hikes). One of the consequences of the 1987 Crash was the introduction of the circuit breaker or
trading curb on the NYSE. Based upon the idea that a cooling-off period would help dissipate
panic selling, these mandatory market shutdowns are triggered whenever a large pre-defined market decline occurs during the
trading day.
2008 financial crisis was a symbol of the Crash of 2008. closing prices during the five trading weeks from September 29, 2008, to October 31, 2008 , the
BSE Sensex experienced a sharp decline. It dropped from over 21,000 points in January 2008 to below 8,000 points in October 2008. On September 15, 2008, the
bankruptcy of Lehman Brothers and the collapse of
Merrill Lynch along with a liquidity crisis of
American International Group, all primarily due to exposure to packaged subprime loans and credit default swaps issued to insure these loans and their issuers, rapidly devolved into a global crisis. This resulted in several
bank failures in Europe and sharp reductions in the value of stocks and commodities worldwide. The failure of banks in Iceland resulted in a devaluation of the
Icelandic króna and threatened the government with bankruptcy. Iceland obtained an emergency loan from the
International Monetary Fund in November. In the United States, 15 banks failed in 2008, while several others were rescued through government intervention or acquisitions by other banks. On October 11, 2008, the head of the
International Monetary Fund (IMF) warned that the world financial system was teetering on the "brink of systemic meltdown". The economic crisis caused countries to close their markets temporarily. On October 8, the
Indonesian stock market halted trading, after a 10% drop in one day.
The Times of London reported that the meltdown was being called the
Crash of 2008, and older traders were comparing it with Black Monday in 1987. The fall that week of 21% compared to a 28.3% fall 21 years earlier, but some traders were saying it was worse. "At least then it was a short, sharp, shock on one day. This has been relentless all week." Other media also referred to the events as the "Crash of 2008". From October 6–10, 2008, the Dow Jones Industrial Average (DJIA) closed lower in all five sessions. Volume levels were record-breaking. The DJIA fell over 1,874 points, or 18%, in its worst weekly decline ever on both a points and percentage basis. The S&P 500 fell more than 20%. The week also set three top-ten NYSE Group Volume Records with October 8 at #5, October 9 at #10, and October 10 at #1. Having been suspended for three successive trading days (October 9, 10, and 13), the Icelandic stock market reopened on 14 October, with the main index, the
OMX Iceland 15, closing at 678.4, which was about 77% lower than the 3,004.6 at the close on October 8. This reflected that the value of the three big banks, which had formed 73.2% of the value of the OMX Iceland 15, had been set to zero. On October 24, 2008, many of the world's stock exchanges experienced the worst declines in their history, with drops of around 10% in most indices. In the U.S., the DJIA fell 3.6%, although not as much as other markets. The
United States dollar and
Japanese yen soared against other major currencies, particularly the
British pound and
Canadian dollar, as world investors sought safe havens. Later that day, the deputy governor of the
Bank of England,
Charlie Bean, suggested that "This is a once in a lifetime crisis, and possibly the largest financial crisis of its kind in human history." By March 6, 2009, the DJIA had dropped 54% to 6,469 from its peak of 14,164 on October 9, 2007, over a span of 17 months, before beginning to recover.
2010 Flash Crash Amidst the
Greek debt crisis, stock indices fell nearly 7% in minutes, with the Dow Jones Industrial Average losing almost 600 points and falling almost 1000 points (about 9%), from its previous close, with almost $1 trillion leaving the market, before recovering most of its decline within 20 minutes. The crash was blamed on a mutual fund company
Waddell & Reed selling a large amount of S&P 500 E-Mini contracts. Following the crash, the SEC reduced the amount needed to trigger a circuit breaker from a 10% decline to a 7% decline.
2011 Market Crash Following Standard & Poor's
downgrade of the United States' credit rating on August 5th, 2011, the S&P 500 plunged 6.68%, wiping out nearly $2.5 trillion in market value.
COVID-19 pandemic (2020) (January 2015 to November 2020). Blue highlight reflects COVID-19 period (taken to start from March 2020 as per first lockdown).|alt= During the week of February 24–28, 2020, stock markets dropped as the
COVID-19 pandemic spread globally. The FTSE 100 dropped 13%, while the DJIA and S&P 500 Index dropped 11–12% in the biggest downward weekly drop since the
2008 financial crisis. On Monday, March 9, 2020, after the launch of the
2020 Russia–Saudi Arabia oil price war, the FTSE and other major European stock market indices fell by nearly 8%. Asian markets fell sharply and the S&P 500 Index dropped 7.60%. The Italian FTSE MIB fell 2,323.98 points, or 11.17%. On March 12, 2020, a day after US President
Donald Trump announced a travel ban from Europe, stock prices again fell sharply. The DJIA declined 9.99% – the largest daily decline since
Black Monday (1987) – despite the
Federal Reserve announcing it would inject $1.5 trillion into money markets. The S&P 500 and the Nasdaq each dropped by approximately 9.5%. The major European stock market indexes all fell over 10%. On March 16, 2020, after it became clear that a
recession was inevitable, the DJIA dropped 12.93%, or 2,997 points, the largest point drop since
Black Monday (1987), surpassing the drop in the prior week, the Nasdaq Composite dropped 12.32%, and the S&P 500 Index dropped 11.98%. By the end of May 2020, the stock market indices briefly recovered to their levels at the end of February 2020. In June 2020 the Nasdaq surpassed its pre-crash high followed by the S&P 500 in August and the Dow in November.
2025 stock market crash The
2025 stock market crash began on April 2, 2025 as a result of the
worldwide tariffs put in place by US President
Donald Trump. The crash is the largest decline in the US stock market since the
2022 stock market decline. On March 21, Trump announced "
Liberation Day", a day meant for imposing universal
tariffs on all imported goods excluding pharmaceuticals, semiconductors, and lumber. On April 2, Trump announced his trade policy with 10% tariffs on all imported goods, with additional
reciprocal tariffs targeting 90 countries such as China with a 34% tariff on all goods imported and a 20% tariff on all E.U imports. These measures took effect on April 9, 2025. The following day after this announcement at the opening bell, the
Dow lost over 1,344.50 points and was down 3.22% and the
S&P 500 lost 176.96 points and was down 3.15%. Shortly after the tariffs were announced, the US stock market lost more than $3 trillion. By the second week of May 2025, the market had recovered. ==Mathematical theory==