The Biggest One-Day
Declines in the Dow Jones Industrial Average
Economic and political turmoil often result in wild
swings of stock prices
by Beth Rowen
Investors large and small carefully monitor the stock market
to keep track of their assets. Just about every news report includes a
summary of the stock market’s daily action. Stock prices are often
dependent on the economy and political climate. Indeed, the market serves as
a barometer of not only the economic state of affairs, but also a measure of
political stability. It can be wildly unpredictable and fragile—a
far-flung election can send prices into a freefall or a rosy financial
report from one sector of the government can send prices soaring. The ebb
and flow of the market can cause great stress and impulsive
action.
The Dow Jones Industrial Average (DJIA) reports the average
stock price of 30 large, publicly traded U.S. companies. It tends to reflect
the state of the stock market as a whole. Though its name would lead you to
believe the DJIA is made up of only industrial companies, the DJIA in fact
contains stocks across many “industries,” not all of which are
industrial. The industries represented include financial, food, technology,
retail, heavy equipment, oil, chemical, pharmaceutical, consumer goods, and
entertainment.
History of the Dow Jones Average
Charles Dow
(1851–1902) and Edward Davis Jones (1856–1920) created the Dow
Jones index in 1884. The first average consisted mainly of railroad stocks.
The industrial average debuted in 1896 with 12 stocks, representing many
industries, and railroad stocks became a separate average. Later in 1896,
the Wall Street Journal began publishing the daily average. The
industrial average expanded from 12 to 20 stocks in 1916, and to 30 in
1928.
Here’s a look at the ten biggest declines in the DJIA,
based on the number of points the average fell. Many of the biggest drops
occurred during the 2008 U.S. financial crisis.
|
Date |
Drop in points (percent in
parentheses) |
Closing price |
Circumstances |
| 1. |
Sept. 29, 2008 |
777.68 (-6.98%) |
10,365.45 |
The financial crisis in the U.S. deepened when the House of
Representatives rejected a $700 billion bailout package. |
| 2. |
Sept. 17, 2001 |
684.81 (-7.13%) |
8,920.70 |
The market plunged on the first day of trading after the Sep. 11
terrorist attacks against the U.S. |
| 3. |
Oct. 9, 2008 |
678.91 (7.3%) |
8,579.19 |
In the most active day in New York Stock Exchange history, investors sell off stocks in a panic, and the Dow closes below 9,000 for the first time in five years. |
| 4. |
April 14, 2000 |
617.77 (-5.66%) |
10,305.78 |
The Dow dropped in reaction to a government report that said
consumer prices were stronger than expected, which triggered fears of
inflation. |
| 5. |
Oct. 27, 1997 |
554.26 (-7.18%) |
7,161.14 |
The Dow fell after an overnight crash of the Asian markets that
started in Hong Kong. Prices dropped so quickly and radically that
trading was halted twice during the day, and the market was shut down
early. |
| 6. |
Aug. 31, 1998 |
512.62 (-6.37%) |
7,539.06 |
The Dow sunk in reaction to political uncertainty in Russia that
left the Russian economy on the brink of collapse. |
| 7. |
Oct. 7, 2008 |
508.39 (-5.11%) |
9,447.11 |
The Dow continued it precipitous fall as the 2008 financial crisis
showed no signs of letting up, despite the passage of a $700 billion
bailout package by the U.S. government. |
| 8. |
Oct. 19, 1987 |
508.00 (-22.61%) |
1,738.74 |
The Dow dipped drastically on “Black Monday,”
following a meltdown in Asian markets that spread to Europe and the
U.S. |
| 9. |
Sept. 15, 2008 |
504.48 (-4.42%) |
10,917.51 |
Fear overtook the market the day after Lehman Brothers filed for
bankruptcy, the largest in U.S. history. It was the worst one-day loss
since the September 11, 2001, terrorist attacks. |
| 10. |
Sept. 17, 2008 |
449.36 (-4.06%) |
10,609.66 |
This decline came the day after the Federal Reserve agreed to a
$85 billion package to rescue the insurance giant American
International Group. |
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