Biggest Stock Market Crashes in History

The stock market is always subject to the ups and downs of different events that occur abroad. There are many factors that can cause the stock market to skyrocket and cause steep declines. So today we will see what have been the biggest falls in the history of the stock market, and briefly the reasons that triggered them.

biggest stock market crashes in history

The Stock Market Crash of 1929

To make a complete analysis of the biggest historical crashes of the Dow Jones, we will discuss the accumulated fall, the day with the biggest declines and the situation in which the economy and the stock market were.

Red October 1929

It is the most famous stock market and economic crisis of the 20th century. During the decade of the roaring twenties, the American economy grew in an incredible way to position itself as the world's leading economy. Obviously, the stock market grew as business profits did, until there came a point where investors became more speculative. Investors saw that the stock market kept rising, so they dedicated themselves to buying shares with the sole reason that they would continue to rise. The stock market grew much faster than the economy, thus creating a bubble, which would crash on October 24, popularly known as Black Thursday, the Dow Jones collapsed.

The bear market lasted for 989 sessions, bottoming out in January 1932 with an accumulated decline of 86%. During this stock market crash we find two days in the TOP5 of daily falls of the Dow Jones. After the aforementioned Black Thursday on October 24, the following two falls from the TOP5 occurred, Black Monday on October 28 with a -12.82% (position 3) and Black Tuesday on October 29 with a -11.73% (position 4):

biggest stock market crashes

World War II Crash

It took place in 1940 with the invasion of France by Hitler's army. Wall Street investors were very clear, it was necessary to sell and take cover in light of the situation that was coming. The entry of the United States into the conflict meant that bearish trends were the norm until 1943, when winds of victory in the war began to blow from the allied front. The debt situation of the American government due to the war reached very significant levels.

Black Monday of 1987

A drop of 508 points, with a percentage in a single session of 22.61% are the visible faces of Black Monday, October 19, 1987. Investors rushed en masse to sell, and the New York market lost the gains it had accumulated over the years. The session on Monday, October 19 was the consequence of a previous bad one in which the devaluation of the dollar was in the air.

Inflation was high and the United States was suffering from oil supply problems. What started in Hong Kong was passing through the whole world until it reached the largest market. There are still no clear causes of this crash, although the cocktail of rising oil and raw materials, along with the depreciation of the dollar, were what led to a situation characterized by volatility.

With all, the Dow Jones harvested the biggest drop in its history in one day, TOP1, on Monday, October 19, 1987 with a -22.61% and infected the major world stock exchanges, London, Frankfurt, Hong Kong… The bear market only lasted 5 sessions and accumulated a decrease of 28.5%

stock market crisis 1987

The Dotcom Bubble Crash

During the period between 1997 and 2000 there was a strong stock market growth of technology company shares, more specifically those related to internet. As in the two previous occasions, a bubble was generated, this time in very specific stock assets, thanks to narratives that preached that these companies were the new economy.

Over time, many of these companies went bankrupt or ceased to exist, and all went through difficult times. After this difficult period, companies like Amazon, Google, or Microsoft consolidated. In addition, this crisis, especially stock market, did not have as much impact on the real economy as the previous two since it only affected this type of companies.

Since all these companies were on the Nasdaq and not on the Dow Jones, it makes no sense to comment on the fall of the latter, but on the former.

In March 2000 the fall began, which shook the NASDAQ, it depreciated by 78% in October. It was clear that fear took its toll on investors when they saw falls, which caused a knock-on effect. Although we currently live in a second, more solid digital era, it was shown that not everything that emerged under the protection of the internet had signs of viability.

what was the dotcom crash

The 2008 Financial Crisis

In the 2000s the US real estate market experienced great growth, as in the previous crisis discussed, a bubble was generated, in this case real estate. Extreme credit facilities were given to finance the purchase of these types of assets, even to people without resources (subprime).

In 2006 the US real estate market collapsed, and it was the first domino, creating a chain fall going through a banking/financial crisis that would quickly spread throughout the economy leading to the global financial crisis of 2008, the stock market crash began in September of the same year with the bankruptcy of Lehman Brothers. Few people took advantage of this, like Michael Burry, who shorted before the collapse(you might know him from ”The big short” film).

As incredible as it may seem, no daily fall of this stock market crash is in the TOP5 of the Dow Jones. This bear market lasted 517 sessions, hitting a bottom in March 2009.

stock market crash michael burry

COVID-19 Crisis

The COVID-19 crisis that we all experienced started as a health crisis due to a new virus. This virus could not be stopped in time and has spread around the world, thus becoming a pandemic. To stop the pandemic, exceptional quarantine measures had to be taken, thus stopping the economy, something that the stock markets have quickly reflected.

This rapid stock market reaction is becoming a historic decline, in 26 days we have accumulated a drop in the Dow Jones of almost 30%. During these 26 days, we find two in which their falls have made it into the TOP5 in the history of the index..

stock market crash s&p 500

To better compare these falls in a more visual way and see how aggressive and fast they are being, just look at the chart below, although in this case it is from the S&P 500, in which the current stock market fall is compared with that of the 2008 crisis and the Dot-com bubble.

Obviously it has not fallen as much as on the other two occasions given the short time that has passed and the magnitude of these crises, which are probably the two largest in history (so far), but the aggressiveness of the speed with which it is doing so this time is impressive.

is the stock market going to crash

Ranking of the TOP 5 worst falls in stock market history

Finally, in the table below you have the TOP5 of daily falls of the Dow Jones, commented to appreciate the calibre of the current situation.

CrisisDaily Fall
Black Monday, Oct 19, 1987-22'61%
COVID-19, 03/16/2020-12'93%
Crash of '29, 10/28/1929-12'82%
Crash of '29, 10/29/1929-11'73%
COVID-19, 03/12/2020-9'99%

Top 3 biggest UK stock market crash

Over the year, the London (UK) stock market have experienced remarkable falls leading big loss and undeniable influence on the global economic activity, and increasing the stock market risks worldwide. Here are the three biggest falls of the UK stock market:

The 1987 Black Monday crash

According to some economist, the black Monday crash was due to the overpricing of the dollar, rising interest rates, and formulation of a speculative bubble on the stock market. The crash affected stock markets around the world including the London stock market, Berlin, Hong Kong, and New York.

With the overvalued Dollar, the bulls have been driving the market and eventually, the financial market buckled on Monday, 19 October, 1987. The Dow Jones stock lost more than 500 points in just a few hours, a fall close to 22% lose.

The Great Crash of 2008 – Burst of the housing bubble

The London stock market on this day falls and the biggest stock exchange market of the FTSE100, The Financial Times Stock Exchange (FTSE) which plunged more than 10% in the early trading closed 8.85% lower at 3932.1, a 381.7 point fall.

This occurrence wipe about £89.5bn off the value of the Britain's biggest companies. This was the worst daily fall since the crash of the 1987 beating it with a 7.85% decline-.

Covid-19 Crisis

The Covid-19 virus outbreak in late 2019 affects the stock market in early 2020, with indices such as the Dow Jones and the FTSE 100 plummeting in the first few months.

The virus spread globally and crippled businesses and travel restriction were placed, many businesses were forced to close and reserve banks started to put measures in place to curb effects of the crash. The FTSE 100 experienced a worse decline than of Black Monday, all totalling a loss of £160.5 billion.

Now that you know the biggest stock market falls in history, let's think, do you these historical situations will happen again or are we learning from our mistakes?

Related content

FAQs about Stock Exchange Crashes in history

Why does a Stock Market crash?

Stock market crashes mainly due to investors fear as well as the underlying economic factor of thee stock market. When investors lose confidence in the economic conditions of a stock exchange market, they panic, sell their stocks and the selling process can trigger a massive decrease in price and then probable crash.

What should I do if the stock market crashes?

If the stock market crashes, don't panic and sell out. Remember that crashes can be short-lived, and prices may quickly rebound. This is especially important for older folks who are looking to live on their investment income or capital gains and may not have time to recoup their losses before needing that money.

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