5 Worst Stock Market Events, By Decade

We all know about the famous Wall Street crash of 1929, which led to the Great Depression, the most severe and long-lasting economic catastrophe in the Western world. Most of us are also more than familiar with the 2007 US stock market crash, which led to the 2008 global financial crisis, the effects of which have not been fully recovered from to this day. However, there also have been many terrible stock market events in the decades between. Here we will explore the worst stock market event of each decade of the second half of the 20th Century.

1950s: Limited Investment Choices

Although stock prices remained high throughout the 1950s, and 1954 saw the Dow Jones surpass its pre-Great Depression peak, investing was still risky business, with investors low in confidence after the previous two decades of strife. This was also prior to the increase in overseas trading, so stocks were limited and too expensive for the majority of people, with only 4% of Americans owning common stock. 

1960s: The Kennedy Slide, 1962

Also known as “the Flash Crash of 1962”, this stock market decline put an end to the decades of economic growth since the end of the Great Depression. Stock prices had been rising steadily since the 1940s, but in 1962, under the Presidency of John F. Kennedy, the stock market experienced a huge decline, where the Dow Jones Industrial Average dropped 5.7% on May 28 alone, and the S&P 500 also experienced a 22.5% decline. This decline only lasted until October, possibly remedied by Kennedy introducing a tax cut for businesses. 

1970s: The Crash of 1973-1974

The stock market crash of 1973-1974 resulted in a bear market (a stock price decline of 20% or more for at least two months, usually resulting in pessimism among investors and reduced investments) that lasted nearly two years. This was due to a number of events: the Bretton Woods Accord ( a money management system encompassing a set of rules adopted by most of the world’s major financial powers) collapsed, the 1973 oil embargo sent the price of oil skyrocketing in western countries, and the value of the US dollar plummeted. This caused a recession across much of the western world, with the United Kingdom particularly effect and dealing with an economic downturn that lasted the rest of the decade.

1980s: Black Monday, 1987

In 1987, the US economy, along with those of much of the western world, was on the up, and business was booming. However, October 19th, 1987 saw the greatest one-day percentage decline in U.S. stock market history, with a more than 20% decrease in the S&P 500 and the Dow Jones Industrial Average. This catastrophe, caused largely by computerized program trading and overvaluation, led to the introduction circuit breakers, which automatically shut down trading for 15 minutes in the event of a price drop of more than 7%, and a suspension of the remainder of the day in the event of a drop of over 20%! 

1990s: Early 1990s Recession

After Iraq invaded Kuwait in July 1990, oil prices increased, leading to consumer and business confidence plummeting and the Dow Jones dropping by 18% in just three months. Although this decline was not as severe as previous crashes, recovery was slow, particularly in employment rates, which did not rise with the economic resurgence. Although the latter half of the decade saw recovery from this downturn, the dot-com bubble burst mere months after the turn of the new millennium, throwing the economy into disorder once again.

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