The Spookiest Days On Wall Street

A little over a year ago the Dow seemed like it was on a runaway roller coaster headed for rock bottom. We all held our collective breath to see when - and where - it would stop. While September 29, 2008, was the single largest daily point loss (777.68), it wasn't the largest one-day percentage loss. That occurred on October 19, 1987, when the Dow dropped 508 points. When it closed at 1,738.74 it had effectively lost 22.6% of its value within one trading day. 

Let's look at eight of the spookiest days on Wall Street and the events surrounding those dramatic losses.

Days that Dropped the Biggest Percentage Points:

1. October 19, 1987   Loss: 508 points   Percentage loss: 22.6%
Dubbed "Black Monday," October 19, 1987, saw the Dow's largest one-day percentage drop since the Great Depression. While no one event can be pinpointed to have triggered the drop, numerous causes have been cited such as overvalued stocks, a shaky dollar and large institutional trading in index futures and derivatives securities.

2. October 28, 1929   Loss: 38 points   Percentage loss: 12.8%
After the start of a Wall Street sell-off on the previous Thursday, on October 28, 1929, investors who feared the worst tried to get out. The result was the second largest one-day percentage drop. The day was appropriately nicknamed "Black Tuesday."

3. October 29, 1929   Loss: 31 points   Percentage loss: 11.7%
The enthusiasm of the industrial revolution led the bulk of newly-found banks to invest in stocks despite their lean reserves; individual wealth-chasers borrowed to buy their shares on margin. But the market couldn't sustain the zeal and the tides turned. After this day's trading was done, the Dow had lost nearly 40% of its value from its all-time high just six weeks prior (September 4, 1929). (Learn about the series of events that triggered the Great Depression in The Crash Of 1929 - Could It Happen Again?)

Days that the Dow Lost the Most Points:

1. September 29, 2008   Loss: 777.68 points   Percentage loss: 6.9%
For weeks Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke had urged Congress to pass legislation authorizing a $700 billion bank bailout plan to jumpstart stalled credit markets. The House voted the measure down and world confidence in the U.S. financial markets was shaken. The Dow dropped nearly 778 points for a total percentage loss of nearly 7%.

2. October 15, 2008   Loss: 733.09 points   Percentage loss: 7.8%
Stocks slid as the "r" word (recession) began gaining traction. A poor national retail sales report and the Fed's release of its Beige Book confirmed fears that the economy was worsening across the board. Investors worldwide believed that Washington's solutions to the credit freeze were not thawing markets fast enough and demonstrated their frustration by pulling their money out. The drop represented a total market value loss of $1.1 trillion.

3. September 17, 2001   Loss: 684.81 points   Percentage loss: 7.13%
Less than a week after the devastation of 9/11 the market re-opened and the Dow promptly sank by more than 7%. Volumes were high on this trading day but not high enough to trigger NYSE circuit breakers. While the Fed tried to help by cutting interest rates and the SEC announced plans to facilitate corporate buy-backs, the slide could not be stopped, with airlines and airline-related companies leading the pack of corporate losers.

4. December 1, 2008   Loss: 679.95 points   Percentage loss: 7.70%
There was no denying it - the U.S. was officially in a recession. The National Bureau of Economic Research confirmed it and at the end of this trading day the Dow had lost nearly 43% of its value since its previous high (October 9, 2007). (Take a look at the biggest economic declines in the U.S. since the Great Depression in A Review Of Past Recessions.)

5. October 9, 2008   Loss: 678.91 points   Percentage loss: 7.33%
Trading volumes continued to astound Wall Street watchers and despite central banks' efforts worldwide to increase liquidity in the credit markets by lowering key benchmark lending rates, the Dow closed below 9,000 for the first time in five years.

Conclusion
Before you panic the next time the market takes a seemingly-unbearable drop, remember that today's loss could portend tomorrow's gain. The market has more than recouped its value after every scary dip and staying the course as a long-term, buy-and-hold investor has proved to be the key to sustainable gains.