Home > Stock market downturn of 2002

This downturn can be viewed as part of a larger bear market or correction, after a decade-long bull market had led to unusually high stock valuations. An outbreak of accounting scandals was a contributing factor to the speed of the fall, as numerous large corporations were forced to restate earnings and investor confidence suffered.

The International Monetary FundThe International Monetary Fund IMF is an international organization responsible for managing the global financial system and for providing loans to its member states to help alleviate balance of payments problems. Part of its mission is to help countries has expressed concern about instabilityThe word stability has a number of technical meanings, all related to the common meaning of the word. In mechanics, stability characterizes the result of small perturbations to a system in mechanical equilibrium. In system analysis and signal processing, in United States stock markets.

The Nasdaq stock market peaked in March 2000, closing with over 5,000 for just two days March 9 and 10. Its peak was at 5,048.62 at the close of trading on March 10March 10 is the 69th day of the year in the Gregorian Calendar (70th in Leap years). There are 296 days remaining. Events 241 BC First Punic War: Battle of the Aegates Islands The Romans sinks the Carthaginian fleet; end of First Punic War. 1496 Christoph, 2000This page is about the year 2000. See 2000 AD for the UK comic book, Number 2000 for other uses. 2000 is a leap year starting on Saturday (see link for calendar), and also the International Year for a Culture of Peace''. Events Y2K passes without the seri. The Dow Jones Industrial AverageThe Dow Jones Industrial Average DJIA is one of several stock market indices created by Wall Street Journal editor and Dow Jones & Company founder Charles Dow. Dow compiled the index as a way to gauge the performance of the industrial component of America, an average of 30 large companies on the New York Stock ExchangeThe New York Stock Exchange NYSE is one of the largest stock exchanges in the world. The NYSE is operated by the not-for-profit corporation New York Stock Exchange, Inc, with its main building located at 18 Broad Street, at the corner of Wall Street, in N, peaked in January 2000. Its peak was at 11,723.00 on January 14, 2000, yet a year later is was largely unchanged with another peak of 11,337.92 on May 21, 2001.

From 1987 to 1995, the Dow Jones Industrial Average rose each year by about 10%. From 1995 to 2000, the Dow rose 15% a year. A bear market began in 2000; by July/August 2002, the Dow dropped to the same level it would have been if the 10% annual growth rate it followed during 1987-1995 had continued up to 2002.

After falling for 11 days and reaching a low below Dow 8000 on July 23, 2002, the market rallied, rising 15% over the next four trading days rising to over Dow 9000 during August. Indices fell sharply again on August 2 and 3. On August 5, stocks continued their decline, Nasdaq breaking the July 23 low. The markets rose sharply over the rest of the week.

Beset by war jitters and dismal earning reports from key technological sector stocks, dropped to a four-year low on September 24, 2002. Stocks on the Nasdaq reached a 6-year low. As of September 24 the Dow Jones Industrial Average had lost 27% of the value it had at the inauguration of George W. Bush, a total loss of 5 trillion dollars. The markets continued their declines, breaking the September low to five-year lows on October 6. It should be noted that the Dow Jones had already lost 9% of its value from its peak when Bush took office, and the Nasdaq had lost 44% of its value from its peak before Bush took office.

Stocks recovered slightly from their October lows, with the Dow remaining in the mid-8000s from November 2002 to mid-January 2003.

To put the downturn of 2002 in perspective, here is a look at U.S. stock market declines in 2000, 2001, and 2002:

• Nasdaq
  • In 2000, the Nasdaq lost 39.28% of its value (4,069.31 to 2,470.52).
  • In 2001, the Nasdaq lost 21.05% of its value (2,470.52 to 1,950.40).
  • In 2002, the Nasdaq lost 31.53% of its value (1,950.40 to 1,335.51).
• Dow Jones Industrial Average
  • In 2000, the Dow lost 6.17% of its value (11,497.10 to 10,788.00)
  • In 2001, the Dow lost 5.35% of its value (10,788.00 to 10,021.60)
  • In 2002, the Dow lost 16.76% of its value (10,021.60 to 8,341.63)

Here is a broader view of the stock market downturn of 2001-2002 with numbers from the stock market bubble of the late 1990s:

§Values represent percent change from previous date listed in table.

See also: economy of the United States