EC The Biggest Drops In The History Of The Dow Jones Industrial Average

The Dow Jones Industrial Average (The Dow) is the 2nd oldest market index in the United States and has been around since 1885 – that is over 130+ years ago.

The Dow is a stock market index that tracks the 30 top companies trading on the NYSE and Nasdaq.

It is widely accepted amongst the majority of investors that the Dow is no longer an accurate representation of the American stock market, despite it being the most highly followed index.

This is because it is not weighted by market capitalization and only measures the top 30 companies.

The top 10 companies on the Dow Jones are widely known amongst worldwide consumers. Here’s a list of them:

  1. 3M
  2. American Express
  3. Apple Inc.
  4. Boeing
  5. Caterpillar Inc.
  6. Chevron
  7. Cisco
  8. Coca-Cola
  9. Dow Inc.
  10. ExxonMobil

Over the last 100 years, there have been countless stock market crashes which have plunged the value of The Dow by thousands of points, devaluing the companies in the process.

The largest drop since Black Monday happened this year on March 16. It had been over 33 years since the infamous day which occurred in 1987.

The leading cause being the fears regarding COVID-19 – it is safe to say the virus has had a detrimental impact on all markets across the globe.

Below we will explore the three biggest drops in The Dow since 1980, those being Black Monday 1987, the October 1997 mini-crash, and the most recent ‘COVID Crash’.

Black Monday, 1987

On the morning of Monday, October 19, 1987, nobody in Wall Street, or around the globe for that matter predicted that by the end of the day the Dow Jones would plunge by over 20%.

It was nearly double the drop that occurred during the great depression in 1929 which was only 12%.

How did it happen I hear you ask? Well, alarm bells were ringing for traders a few days before the crash. A series of unfortunate events led up to the decline.

Six days before Black Monday the Dow had a major decrease of just under 4%, dropping by another 2.5% the next day.

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Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are ...

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Moon Kil Woong 1 month ago Contributor's comment

It certainly isn't representative of most businesses. The market environment and government have helped these firms grow and prosper and they have been able to do this by cannibalizing other businesses, especially mid and small businesses. This has increased efficiencies and have cut costs. The stock market has prospered, however, the economy as a whole is still struggling.