Twenty Years After the Nasdaq Cracked

Twenty years ago today, the Nasdaq plunged. It had already backed off its peak, but on April 14, the selling became intense.

From CNN:

U.S. stocks plummeted Friday, capping off five days of stunning losses that handed the Nasdaq composite index its worst weekly performance of all time and the Dow Jones industrial average its steepest one-session point loss in history.

The Dow tumbled more than 600 points, trouncing the previous record and triggering circuit breakers at the New York Stock Exchange. The sell-off gave the Nasdaq its biggest point loss of all time, topping the last No. 1 plunge set just five days ago.

But the statistical standout could be this: the Nasdaq fell more than 25 percent this week, trouncing the 19 percent fall that began Oct. 21, 1987, Black Monday.

Friday’s plunge came after the government said prices at the consumer level showed surprising strength last month, triggering fears that the Federal Reserve may raise interest rates more aggressively.

The Nasdaq composite index shed 355.61 points, or over 9 percent, to 3,321.17, its biggest one-day decline on record. At one point during the trading session, the Nasdaq was down 411 points. The index lost over 1,000 points this week and is now off more than 34 percent from its record high set March 10 – well beyond the 20 percent decline Wall Street sees as the beginning of a bear market.

Meanwhile, the Dow Jones industrial average skidded 616.23 points to 10,307.32, off over 5 percent, but an improvement from its 722-point drop in the last hour of trading. The broader S&P 500 index fell 83.20 to 1,357.31.

That was only the beginning. The Nasdaq wouldn’t hit bottom for another three years.

The good news for us is that the stock market is rebounding today. The S&P 500 is on pace for its highest close in a month. Some major banks reported Q1 earnings this morning. The results were pretty bad, as expected, but the banking sector is holding up somewhat well. Among the mega-caps, Walmart and Amazon are at all-time highs this morning.

Yesterday was a frustrating day for investors. The market had gains from very few stocks while most stocks did poorly. I counted 372 stocks in the S&P 500 that trailed the index yesterday.

Today is much better. In fact, shares of Silgan (SLGN) aren’t far from a new 52-week high.

Posted by on April 14th, 2020 at 12:42 pm


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