We may receive financial compensation from these third parties. Please be aware that some of the links on this site will direct you to the websites of third parties, some of whom are marketing affiliates and/or business partners of this site and/or its owners, operators and affiliates. With no one left willing to buy stocks, and everyone trying to sell at the same time, the market had nowhere to go but down.Ībout the Author - The Stock Market Crash of 1929 The simple laws of supply and demand were in place. Panic selling brought the market to the ground. Companies were hard hit by the decrease in consumer spending, and this trend would continue for nearly three years.Īpart from the panic selling on those few days in October of 1929 that would cause sharp price declines in common stock, there was nothing unusual or "inflated" about stock prices in the days preceding or following the stock market crash of 1929. Since consumer outlook was decidedly pessimistic, the economy contracted sharply. The stock market continued to track the economy following the crash of 1929, this time in a negative direction. Dividends were on the rise and were expected to continue to increase in the coming years. The economy was expanding rapidly, and companies were enjoying this expansion. In fact, most of the stock values had merely tracked the rise in expected dividend payments. Interestingly, economists that have later examined the fundamentals from the 1920s believe there was not a stock market bubble ready to burst by 1929. Even as the market started to rise in 1932, it would take another 22 years before the Dow would climb above the levels seen in 1929. Overall, the market would see a decline of nearly 90%. Over the next month the market continued to decline sharply, however, the market would not bottom out until July 1932, when the Dow hit 41 from a high of 381 in 1929. Recovering from the 1929 Stock Market Crash With all hope of a market recovery now gone, panic selling continued and the market fell another 12%. The ticker tape machines fell behind by nearly 3 hours. On Black Tuesday, a record 16.4 million shares exchanged hands. October 29, 1929: Black Tuesdayīlack Tuesday - October 29th, 1929 - is the day that most historians agree dealt the final blow to the Roaring 20s, and was the starting point of the Great Depression. By the end of the day, the market was down another 13%. On Black Monday, trading volumes were near 9.25 million shares, and market confidence declined sharply. However, market conditions quickly deteriorated again on Black Monday - October 28th, 1929 - and high trading volumes once again put pressure on the flow of information. This led to a sense of security over the weekend, as investors felt the market could rebound. October 28, 1929: Black Mondayįollowing Black Thursday, the market took back some of the loss on Friday. By the end of the day, the market had fallen 33 points or around 9%. At one point, ticker tapes were running nearly 90 minutes behind the market. The systems for tracking the market prices could not keep up with trading volume, and that may have contributed to panic selling on that day. But on Black Thursday, a record 12.9 million shares were exchanged. At that time, the volume on the stock exchange was around 4 million shares each trading day. The first sign of trouble was on Black Thursday - October 24th, 1929. The stock market crashed over a period of five days. But was that really true? Let's take a quick look at the three most infamous days of that era. Many people blamed investors for taking speculative approaches to the market, and driving stock prices well in excess of fundamental values. So how did this roar come to a screeching halt? What exactly contributed to, or caused, the great stock market crash of 1929? Events Leading up to the 1929 Stock Market Crash Relaxed credit terms from banks and stock brokers fueled the buying frenzy. Investors frequently talked about the great wealth that could be made in the stock market. From 1926 to 1929, the market indices moved up nearly 400%. The stock market benefited a great deal from the expanding economy.
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