The 5 Wildest Days the Dow Has Ever Seen

The past few years have been a placid cruise compared to the storms of earlier days. What lessons can we learn from these wild moves?

Feb 17, 2014 at 3:32PM

Investors who got used to last year's tranquil rise might want to reset their expectations. After a month and a half of trading, the Dow Jones Industrial Average (DJINDICES:^DJI) has already made eight moves of 1% or more, in either direction. At the rate we're going, we'll experience 65 trading days like that for the full year, putting 2014 slightly ahead of the Dow's historical annual average for such days.

That doesn't mean we need to fear a meltdown, though. There have been a number of years throughout market history where the Dow nudged 1% higher day after day, to close with excellent returns for the full year. The real worry is that, instead of 1% days, we'll start having 10% days -- heart-stopping enough when they happen to individual stocks, but a momentous event when spread across the entire market. Let's take a look at the five days of Dow trading since 1896 that produced the largest single-day change in values. Maybe we can gain a better understanding of the events that set these moves in motion, and learn how to avoid them ahead of time.

5: Oct. 30, 1929 (12.3% gain)
Dow Jones Industrial Average Chart

Dow Jones Industrial Average data by YCharts

The end of October in 1929 remains the wildest week in Dow history, and it was capped off by a monster surge on Wednesday the 30th as traders rejoiced over the apparent "end" of the crash that had begun two days earlier. Even publicity-shy Standard Oil billionaire John D. Rockefeller got in on the action, telling the press that he had been feverishly buying stocks during the earlier declines. The market's pop can best be described as a short-term relief rally, as the feeling across much of Wall Street was that any crash would likely be short-lived. Of course, we know better now. But still, it's important to remember that any huge gains often come in response to huge losses, like those that began only two days earlier...

4: Oct. 28, 1929 (12.8% loss)
The Dow had to give investors a reason to gobble up shares on Oct. 30, and the horrific drop that took place two days earlier was good enough for many. This day, which was the original Black Monday on Wall Street until a more violent torrent of sales swept through the exchange (one you'll see later in this list), was blamed on overleveraged speculators and taken as a sign that the market would soon snap back. The $14 billion one-day loss of share value that hit the market on Black Monday remains the largest such loss in relation to the national GDP ever seen -- it was as though 15% of the value of America's economy blew up in one frenetic day.

Surprisingly, contemporary reports from this day show a remarkably calm array of journalists, politicians, and financial kingpins. In many respects, it would have been easy for them to overlook or miss the danger looming ahead for the markets, even after this selling stampede. Many economic indicators remained positive at the time, and extreme leverage, far from being demonized, was touted as a clever financial innovation that could help the little guy get rich without spending like a big guy. It wasn't until much later that everyone realized how fragile Wall Street really was. In our era of constantly updated economic and financial information (quarterly financial disclosures wouldn't be required until the Roosevelt Administration created the SEC), this sort of blithe ignorance in the face of a massive crash seems far less likely.

3: Oct. 6, 1931 (14.9% gain)
By late 1931, the blithe optimism Wall Street had favored in the face of 1929's crash had given way to a sense of grinding frustration. The Dow had by this point lost three-quarters of its value since peaking in 1929, with the double-digit percentage moves of that year giving way to day after day of down, down, down. By 1931, investors were sick of it, so any positive news might have sparked a surge. The news on this day was fairly straightforward, and would be familiar to anyone who experienced our latest financial crisis. In a nutshell, President Herbert Hoover tried to bail out the banking system. This plan appears surprisingly similar to the Troubled Asset Relief Program passed in 2008 -- and like TARP, Hoover's efforts weren't enough to stop the Dow from resuming its downward slide soon afterwards.

2: March 15, 1933 (15.3% gain)
Dow Jones Industrial Average Chart

Dow Jones Industrial Average data by YCharts

This remains the largest one-day surge in Dow history, and its cause is just as unique: this was the day that newly inaugurated President Franklin D. Roosevelt ended the national banking holiday he had implemented less than a day after taking the oath of office. For the two weeks that America's banks kept their doors closed, the Roosevelt Administration worked feverishly to shore up America's fragile financial system with some truly groundbreaking efforts. Between his inauguration and the end of the banking holiday, Roosevelt took the United States off the gold standard and simultaneously devalued the dollar by initiating a large printing run at the Federal Reserve.

The markets responded joyously to these changes, and this day marks the clearest sign of revival in the Dow since 1929. The Dow's value doubled in the four months after Roosevelt's banking holiday began, and never again reached the lows it had touched before he took office. If there's a lesson here, it might be that the markets respond better to new ideas than they do to efforts that only prop up old ones.

1: Oct. 19, 1987 (22.6% loss)
Dow Jones Industrial Average Chart

Dow Jones Industrial Average data by YCharts

The collapse that took place in 1987 remains unique in market history for its ferocity and for the confusion it caused. To this day, there is no consensus on the true cause of this massive drop, although newly implemented computerized trading systems remain a major target of blame -- particularly now that high-frequency trading has become so widespread on the market. Since the Dow quickly shrugged off the drop (it enjoyed two massive pops in the days that followed and returned to pre-crash levels by 1989), its long-term impact has turned out to be far more important than its immediate effect.

The panic that erupted during and after this crash led to sweeping changes in policy for both the markets and for the Federal Reserve, which had recently installed Alan Greenspan as its Chairman. Circuit breakers were installed to prevent marketwide collapses of this nature, and Greenspan promised that liquidity would be accessible for the stressed markets, creating what's now known as the "Greenspan put." With implicit government support and a promise that devastating drops would be stopped in their tracks, the Dow set off on one of the greatest bull-market surges in its history.

Could these sorts of days return? It's likely -- the Dow experienced two days of double-digit gains during the tumult of 2008 -- but this sort of action tends to happen only in the heat of a financial panic, with rather rare exceptions. But what would you do if it happened? The immediate public response to a major move, as we've already seen, often tends to be the wrong one over the long term.

Don't let a few wild days scare you away...
Millions of Americans have waited on the sidelines since the market meltdown in 2008 and 2009, too scared to invest and put their money at further risk. Yet those who've stayed out of the market have missed out on huge gains and put their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.

Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.

The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers