Reviewing the Biggest Crashes in U.S. Stock Market History: Nasdaq Took Over a Decade to Recover from the Dot-Com Bubble, Semiconductor Index Plummets 15.9% in a Single Day Amid the Pandemic

BlockBeats news, November 6 - Today, US stocks experienced broad selling, with the tech and AI sectors leading the declines. Within the first hour of trading, the total market capitalization of US stocks evaporated by approximately $2.3 trillion, with the S&P 500 hitting an intraday low of about 7,394 points, down approximately 3.83%. The Philadelphia Semiconductor Index (SOX) fell 11.48% intraday, approaching the historical record of about 15.9% set on March 16, 2020. Market attention is drawn back to historical major crashes and extreme volatility, with a review of several major historical plunges as follows:

1929: Black Monday and Black Tuesday, the onset of the Great Depression. On October 28, 1929 (Black Monday), the Dow fell nearly 13%, and the next day, Black Tuesday, it fell another nearly 12%. On a daily basis, the two-day declines were approximately 12.82% and 11.73%, respectively. Speculative leverage, liquidity contraction, and confidence collapse combined, and the bear market deepened over the following years, with the Dow cumulatively falling about 89% from its peak to its low in July 1932, deeply intertwined with the Great Depression.

October 19, 1987: Black Monday, the Dow fell over 20% in a single day. The Dow fell about 22.6% that day, still the largest single-day percentage decline in its history. Triggers included valuation pressures after a rapid prior rise, trade and dollar concerns, and mechanisms such as portfolio insurance and program trading that amplified selling during the decline. This led to subsequent improvements in trading systems like circuit breakers, while the Federal Reserve emphasized providing liquidity to stabilize the financial system.

2000–2002: Dot-com bubble burst, Nasdaq halved twice. The Nasdaq Composite fell about 78% cumulatively from its March 2000 peak to its October 2002 low. Many ".com" companies had valuations detached from earnings and cash flow, and after the bubble burst, tech stocks experienced years of gradual decline, with the Nasdaq taking over a decade to recover its previous high.

2008 financial crisis: Single-day plunges and phased halving coexisted. On September 29, 2008, the US House of Representatives initially rejected the financial bailout plan, and the Dow fell 6.98%, the S&P 500 about 8.8%, and the Nasdaq about 9.1%. On October 15, amid rising concerns about retail and growth, the Dow fell another 7.87%, nearing the worst trading day levels since 1987. In phases, the S&P 500 fell about 57% from its October 2007 peak to its March 2009 low. The core of the crisis was subprime mortgages and deleveraging by financial institutions, which quickly transmitted to the real economy.

May 6, 2010: Flash Crash. The Dow Jones Industrial Average plunged nearly 1,000 points intraday, a drop of about 9%, before rapidly recovering most of its losses and closing the day down about 3.2%. The event exposed risks from high-frequency trading and the instantaneous evaporation of liquidity, and prompted subsequent adjustments to market structure and circuit breaker mechanisms.

March 2020: Consecutive sharp selloffs under the pandemic shock. On March 16, 2020, the Dow fell 12.93%, the S&P 500 dropped 11.98%, and the Nasdaq declined 12.32%, marking one of the most severe single-day declines since 1987. The Philadelphia Semiconductor Index closed down about 15.9%, its largest single-day drop in history.

2022 Bear Market: A slow bear under the rate-hike cycle. Amid high inflation and aggressive Federal Reserve rate hikes, the S&P 500 cumulatively drew down about a quarter from its high near January 2022 to its low near October; the Nasdaq fell even more deeply. Unlike the single-day cliff-like drops of 1929, 1987, and 2020, the 2022 market underwent a valuation compression that lasted for several months.