Wall Street was having the time of its life heading into 2020, with the S&P 500 advancing roughly 29% in 2019— almost triple the historical average return of the stock market.
That momentum carried into 2020 with the Dow Jones Industrial Average hitting a record close of 29,551 on February 12. A week later, on February 19, the S&P 500 hit a record closing high of 3,386. That same day, the tech-heavy Nasdaq closed at a record 9,817.
And the outlook for the remainder of 2020 remained bullish.
Suffice to say, in early February 2020 no one saw what was just over the horizon. Over the last 1,000 days, investors have experienced unprecedented gains and losses, resulting in one of the most volatile periods in history.
The single-day losses have far outpaced any single-day gains, which has added to growing investor pessimism and anxiety. And by all accounts, it looks like there will be more pain over the coming months.
In honour of Halloween, here are six of the scariest days that have occurred on Wall Street over the last 1,000 days.
March 12, 2020
- S&P 500 -9.51%
- Dow Jones Industrial Average -9.99%
- Nasdaq -9.43%
March 12th was a historic day for Wall Street, but one many investors would rather forget. Stocks plunged as fears about COVID-19 accelerated. The S&P 500 closed the day down 9.51%, its worst day since October 19, 1987 (Black Monday), when it lost 20.47%.
The Dow Jones closed the day down 9.99%, for its worst percentage decline since Black Monday, when it lost 22.61%. Not to be outdone, the Nasdaq declined 9.43%, for its worst day since April 2000, just before the dot-com bubble burst.
March 12th was also the day the longest bull-market on record came to an end, with the S&P 500 falling into bear market territory. The index hit a pandemic low on March 23, a full 35% below its high in February 19, 2020.
To combat the pandemic and prevent an economic collapse the Federal Reserve sent its key lending rate to record lows. This helped juice the stock market. By August, the shortest bear market in history was over and the S&P 500 was back in record territory. But, as we have seen, it hasn’t been smooth sailing.
March 16, 2020
- S&P 500 -12%
- Dow Jones Industrials -12.9%
- Nasdaq -12.3%
March 16th was when the pandemic became very real for Wall Street, with investors realizing COVID-19 was going to upend the economy. The S&P 500 fell seven percent shortly after opening, which triggered circuit breakers and halted trading for 15 minutes. It was the third circuit breaker halt that month after March 9th and 12th.
By the end of the day, the S&P had plunged 12%, its third biggest percentage loss; the Dow Industrials fell 12.9%, the second biggest percentage loss since WWII, and the Nasdaq experienced its largest single-day percentage loss of 12.3%.
November 26, 2021
- Dow Jones Industrial Average -2.53%
- S&P 500 -2.27%
- Nasdaq -2.23%
On November 26th, U.S. stocks slid as word of a new variant of COVID-19 was found in South Africa, sparking concerns that a new outbreak could underscore the then fragile economic recovery.
The one-day sell-off represented the worst post-Thanksgiving performance for the S&P 500 since 1941, the same year President Roosevelt signed a bill establishing the fourth Thursday in November as a national holiday.
May 18, 2022
- S&P 500 -4.04%
- Dow Jones Industrial Average -3.6%
- Nasdaq -4.7%
The S&P 500 inched closer to bear market territory on May 18th after tumbling 4.04%. This put the index down 18.5% from its January highs. The sharp sell-off came on fears that the Federal Reserve’s aggressive rate hikes to tame runaway inflation would send the U.S. into a recession.
The day before, Federal Reserve Chair Jerome Powell said “there won’t be any hesitation” to bring down inflation.
And there was some evidence to support these fears. On May 18th, both Target Corporation (NYSE:TGT) and Walmart Inc (NYSE:WMT), bellwethers of consumer spending, missed on their quarterly earnings estimates and provided weak guidance.
June 13, 2022
- S&P 500 -3.88%
- Dow Jones Industrial Average -2.7%
- Nasdaq -3.5%
June 13th was the fifth consecutive trading day in which the S&P 500 had fallen lower, with the index slipping deeper into bear market territory. A bear market is defined as a loss of 20% or more from its most recent record highs.
The decline in equities came after the Department of Labor reported that the May CPI rose 8.6% on an annual basis, the fastest clip since December 1981. Inflation was also up 1.0% on a monthly basis, higher than analyst estimates of 0.7%.
The worse-than-expected inflation data signaled more aggressive rate hikes from the Federal Reserve, a move that could tip the country into a recession.
September 13, 2022
- S&P 500 -4.3%
- Dow Jones -3.9%
- Nasdaq -5.2%
The broader stock market took a big hit on September 13th after a key inflation report came out hotter than expected. During the month of August, the consumer price index (CPI), otherwise defined as inflation, increased 0.1% for the month and 8.3% on an annual basis.
This was lower than July’s 8.5% reading but higher than the 8.1% forecast. On a month-over-month basis, economists were expecting inflation to decline 0.1%.
The stronger than expected data hurt investor optimism and dashed hopes that cooling prices would result in a less hawkish Federal Reserve and future rate hikes. Just five stocks on the entire S&P 500 finished the day in positive territory.
The big one-day drop came after four straight positive sessions, with investors seemingly believing inflation had peaked. The August data showed otherwise.
Ongoing Volatility Could Lead To Big Daily Losses in 2023
In 2022, the broader markets slid back into bear market territory and while investors may experience periods of optimism, chances are good the stock market hasn’t bottomed.
If inflation isn’t under control and interest rates aren’t going down, the stock market has no reason to rebound. This could be an indication that scarier days are upon us.