Stock market crash
A stock market crash
is a sudden dramatic loss of value of shares of stock
. Crashes often follow speculative
stock market bubbles such as the dot-com
The most famous crash was in 1929, when the Dow dropped 50%, preceded the Great Depression. The succeeding years saw the Dow drop a total of over 85%.
There was also a crash or "adjustment" on Monday October 19, 1987, known in financial circles as Black Monday, when the Dow Jones Industrial Average lost 22% of its value in one day, bringing to an end a five-year bull run. The FTSE lost 10.8% on that Monday and a further 12.2% the following day. The pattern was repeated across the world.
The stock market downturn of 2002 was part of a larger bear market that took the NASDAQ 75% from its highs and broader indices down 30%.
Stock market crashes are driven by panic as much as by underlying economic factors. So long as the prospect of further daily drops in the value of stocks persists, a bear market, equity investorss can be expected to sell.
See also: Financial markets, Stock market, Accountancy scandals, Great Depression