September 15, 2008
International markets, as well as our own, reacted sharply to the uncertain prospects arising from a feared liquidity crunch. Where the leverage of financial giants caused substantiak gains in the past, these, in turn, would escalate to large losses, and even failures, in the future.
Accordingly, equity prices plunged. The S&P500 dropped -4.65 percent, the largest loss since September 2001. More over, there are only 13 other days, since 1950, that this index fell more than today; and only two occurring since January 2000
The DJIA fared little better, going down -4.42 percent. This also was its worst day since September 2002. Such a huge, daily loss is also rare for this index: the DJIA has just 20 other daily losses deeper than -4.0 percent.
The NASDAQ loss was substantially smaller, at -3.26 percent. This indexs history, however, shows many closes n excess of - 3.0 percent. Since it started trading in 1975, it had 148 other such daily, losses. Indeed, two such closes occurred this year; with one in January and the last one on June 27.
As for the day following these steep losses, the S&P500 recovered on nine occasions, falling further just four times. Whereas one of these was the -20.5 percent loss in October 1987, the nine recoveries were all above 1.68 percent, with two closes higher than five percent.
DJIA -4.42 percent
NASDAQ -3.26 percent
S&P500 -4.65 percent