Dow Drops More Than 1,100 Points
It was the scariest day on Wall Street in years.
Stocks went into free fall on Monday, and the Dow plunged almost 1,600 points — easily the biggest point decline in history during a trading day.
Buyers charged back in and limited the damage, but at the closing bell the Dow was still down 1,175 points, by far its worst closing point decline on record.
The drop amounted to 4.6% — the biggest decline since August 2011, during the European debt crisis. But it was nowhere close to the destruction on Black Monday in 1987 or the financial crisis of 2008. Still, for investors lulled to sleep by the steady upward climb since Election Day, it was alarming.
The recent plunge in the Dow Jones industrial average has investors worried, but it’s important to keep in mind that the Dow has always been in turmoil and investors need to focus on the long term.
The Dow’s 120-year history the road is peppered with potholes of uncertainty as markets react to global events.
According to Market Watch, which published a chart from Chris Kacher of MoKa Investors and virtueofselfishinvesting.com, “the chart proves once again that over the long term, the stock market always rises because ‘intelligence, creativity, and innovation always trump fear,’ according to Kacher.”
The chart highlights some of the biggest drops in Dow Jones history and details the recovery time of each.
The Dow has been on a tear over the last year, closing above 25,000 earlier this year for the first time in history, and crossing 20,000 for the first time in early 2017.
For reference, the Dow topped 15,000 in 2013, and crossed the 10,000 barrier in 1999.
According to Kacher’s chart and Market Watch, 25 years passed for the Dow to recover from the 1929 stock market crash; 16 years to recover from the effects of the Vietnam War, the 1973 oil crisis and President Richard Nixon’s resignation; and six years to recover from last decade’s recession.
So don’t panic just yet. As Market Watch points out, “the market always recovers. But sometimes, it just takes a little longer.”
SEE THE CHART HERE: