Previous Crisis and their impact on the stock market

  • The 1953 recession was caused by a mixture of factors. The Federal Reserve tightened monetary policy in 1952 during an inflationary period following the Korean War. Increased pessimism in the economy was caused by the rise in interest rates. The losses incurred during this period were approx 30% but the economies recovered within 23 months and the market had shown 129% growth post the crisis. 

 

  • Eisenhower Recession was a global economic slowdown that occurred in the year 1958. Recessions between 1945 and 1970 were the most severe during the post-war boom. Based on the length and severity of the decreases in employment, production, and income, the recession was considered mild. The markets had incurred 22% loss and it took approx. 13 months to show 39% of the growth. 

 

  • President John F. Kennedy's term in office was marked by the Kennedy Slide or Flash Crash of 1962. Until the end of the Cuban Missile Crisis, the S&P 500 fell by 22.5% and the stock market never recovered. 28% losses were incurred and it took 39 months to recover the markets. 

 

  • Inflationary pressures from the Vietnam War and years of economic prosperity contributed to the 1966 credit crisis. A credit crisis ensued as a result of the Federal Reserve's decision to tighten monetary policy. 22% losses were incurred and it took 25 months to recover the markets. Post the crisis the markets had shown 48% gains. 

 

  • The Nixon Recession began in 1969 and lasted until 1970. 1969 was a bad year for the stock market, as inflation, the Vietnam War, and tightening monetary policy all contributed to its demise. Between mid-1970 and early '71, the S&P 500 had a 35% decline before making a strong comeback. 

 

  • The 1973-74 stock market meltdown was one of the most devastating in modern times. That year's oil embargo by members of the Organization of Petroleum Exporting Countries (OPEC) added to it. 

 

  • Following the 1979 Iranian Revolution, which pushed oil prices up and triggered a second oil crisis, the 1981-82 recession occurred. Because of the Fed's continued rise in interest rates to combat inflation, little or no economic growth was predicted for 1981, according to the Federal Reserve. 

 

  • Black Monday was the largest one-day percentage drop in history. As of October 19, 1987, both the Dow Jones Industrial Average and the S&P 500 were down almost 18% from their highs for the year. All of the world's twenty-three major stock markets had a comparable fall in October. 

 

  • In July 1990, Iraq invaded Kuwait, forcing oil prices to rise, which triggered the 1990-91 recession. Even while it wasn't as serious or long-lasting as the previous oil crises, the price jump contributed to the early 1990s recession in the United States. 

 

  • Excessive speculation in Internet-related companies generated a stock market bubble in the late 1990s known as the "Dot-com" bubble. Between 1995 and its peak in March 2000, the Nasdaq Composite index rose 400% only to fall 78% from its peak by October 2002. 

 

  • The Global Financial Crisis was considered by many economists to have been the most serious financial crisis since the Great Depression of the 1930s. The Great Recession was the result of the financial crisis. This is still the sharpest bear market in the history of the S&P 500 index. This was the major crisis and the markets incurred 57% loss but it took almost 23 months to recover. Once the markets were in the post crisis period they have shown 326% growth.