By the end of Thursday, Oct. 24, 1929, the New York Stock Exchange had rebounded from the 10% dip that the market had taken earlier that day. The most catastrophic stock market crash in the history of the United States, Black Tuesday took place on October 29, 1929 and was when the price of stocks completely collapsed. What started off then was a wild ride in the stock markets, starting on October 24, also known as Black Thursday and ending on October 29, known as the Black Tuesday. To understand what caused Black Tuesday, one must go just a few weeks prior to this Black Swan event. Brokers were known for lending investors more than 2/3 of the value of stock they were purchasing. The stock market had effectively crashed and people had no confidence in it anymore. However, that being said, while the stock market continued to tumble there was recovery in sight by early 1933. As investors watched, the stock market started to become volatile. The market reached its low on November 13th at 198.60 then began to rally. So he started buying left and right, and he reversed the crash and restored the market to almost pre-Black Thursday levels. The Federal Reserve in the summer of 1929 was worried about the excess of speculation so they actually did a tightening at the beginning of September. Considering the fact that the price kept going up, people would get greedy and hope for it to go up more before pulling out. By October, Charles Mitchell and a coalition of other bankers wanted to instill market confidence and publicly announced purchasing shares which were already at high prices. People are saying today that stocks seem to be overvalued and they’re supported by extremely low interest rates; credit was kind of cheap in the 1920s until the Federal Reserve tightened. On July 8, 1932, the Dow closed at 41.22.
In a single day, the market lost $14 billion. In an effort to boost confidence, the government created the Smoot-Hawley law which imposed high taxes on imports from overseas. On Black Tuesday, nearly 16 million shares were traded.
President Calvin Coolidge had ironically delivered his State of the Union address in 1928 where he said that Americans had never “met with a more pleasing prospect than that which appears at the present time.”. Automobiles, which were in demand during the day saw their sales decline rapidly, which led to a slowdown in production and eventually layoffs. People ignore the fact that the stock market had a strong recovery after the crash because it’s inconvenient for the story. “For so many months so many people had saved money and borrowed money and borrowed on their borrowings to possess themselves of the little pieces of paper by virtue of which they became partners in U. S. Industry,” TIME wrote of the mood on that first frightening day. While each day of the week starting since Black Thursday was given a name, Black Tuesday stands out as it marked the start of a long a tumultuous time in the stock market’s history and led to the Great Depression. Black Tuesday refers to a precipitous drop in the value of the Dow Jones Industrial Average (DJIA) on Oct 29, 1929. The growth in the economy led to a strong surge in the stock markets fuelled by wild speculation which was met by a cataclysmic bust by October of 1929. The Dow Jones was trading around 75.00 prior to the start of the bull-run and by 1929 August, the Dow hit an all-time high of the time at 380.33, all in a span of eight years.
whats the point of you calling it loser if you never even read it or you just don’t like history at all, Your email address will not be published. The record number of shares that were transacted on Black Tuesday set a history that remained intact for nearly 40 years, until it was broken in 1968. The above price chart for the Dow Jones industrial average shows how prices reacted to the unfolding events on the ground. But just as there was a lot of confusion back then about what was going on, there is still confusion about the effect Black Thursday had on the economy in the years that followed. “Mitchell more than any 50 men is responsible for this stock crash.”, The Federal Reserve Bank rate hike and the Gold standard. As the stock market continued to push higher, the urge to borrow more and invest only grew. Black Tuesday marked the end of the stock market rout in some ways as the Dow Jones pulled back higher on Wednesday and Thursday. We’ve talked about some particular examples of financial crises, but these things have been going on periodically. It stopped the slide for the 24Th; however, by Monday, the 28Th, everyone knew about the banks buying up the stock in the hopes of correcting the problem. This speculation resulted in an economic bubble where the price to earnings ratio was up to 32.6 in September of 1929. As the stock market began to tumble, it also took a toll on the economic confidence, which eventually turned a recession into the Great Depression. However what is for certain is the fact that speculative behavior by investors, alongside policy actions from the Federal Reserve Bank and the U.S. government in the months after Black Tuesday led to the Great Depression.