Stock Market Crash

Stock Market Crash

A stock market crash refers to a drastic, often unforeseen drop in the prices of stocks in the stock market. The sudden drop in stock prices may be influenced by economic conditions, catastrophic event(s), or speculative elements that sweep across the market. Most market crashes are short bursts of market downturns that can last for a single day or much longer

A stock market crash occurs when the market has entered an unstable phase, and an economic disturbance causes share prices to fall suddenly and unexpectedly.

Historical stock market crashes in the U.S. occurred in 1929, 1987, 1999-2000, 2008, and 2020

The 2007/08 stock market crash was triggered by the collapse of mortgage-backed securities in the housing sector

High frequency of speculative trading caused the securities to rise and decline in value as housing prices receded

Circuit Breakers

Current guidelines by the SEC mandate a 15-minute pause in trading in certain situations, in hopes of calming the market.

Plunge Protection

Turbulent markets can also be dampened by the purchase of massive quantities of stocks by large entities when prices drop.

The Black Monday Crash of October 1987

The October 1987 market crash became known as Black Monday and is attributed to computer trading, derivative securities, over-evaluation, illiquidity, and trade and budget deficits

Understanding Market Crashes

Stock market crashes have severe effects on the economy and investors’ behavior

The Dot-com Crash of 2000-2001

The 2000 dot-com market collapse was triggered by technology stocks

The COVID Crash of March 2020

The market collapse in March 2020 was caused by the government’s reaction to the COVID-19 outbreak, a rapidly spreading coronavirus around the world

Records of Stock Market Crashes

The first tulip market crash can be traced back to the Republic of the Netherlands between 1585 and 1650

The Great Depression Crash of October 1929

This was the first major U.S. market crash, where speculations caused share prices to skyrocket

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