We have been witnessing one of the longest bull runs in the history of stock markets. Some of the major indices, including the Dow, have made record-breaking highs since the Great Recession of 2008.
In this article, we see the extent to which the Dow reacted to positive events in the past during some of its best single-day trading sessions.
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Inside the 10 Best Days
To date, the Dow has managed to log in several noteworthy gains. Below, we highlight the Dow’s 10 best single trading sessions.
1. March 15, 1933: Markets Re-Open After FDR’s Bank Holiday (15.3%)
On March 15, 1933, the Dow Jones Industrial Average logged in its biggest one-day percent gain ever. Prior to its rally, President Franklin D. Roosevelt temporarily shut down the banks on March 5 following a month-long run on U.S. banks. Consequently, U.S. markets remained closed during that period. When both markets and banks were reopened, investor confidence skyrocketed, pushing the DJIA up 15.3% during the session.
2. October 6, 1931: Hoover’s Attempts to Restore Confidence in Banks (14.9%)
More than a year and a half before FDR closed U.S. banks, President Herbert Hoover also attempted to restore confidence in the U.S. banking system. On October 6, 1931, Hoover announced his plan to deal with the solvency and security of the banking system. The plan included a $500 million fund to provide liquidity to weaker banks, expanding the Fed’s mandate, and creating “land banks” (the predecessors to Fannie & Freddie). Though Hoover’s bold move managed to push the DJIA up almost 15% during the session, it was not enough to stop the DJIA’s downward trend.
3. October 30, 1929: The Day After the Stock Market Crash of 1929 (12.3%)
On October 29, 1929–”Black Tuesday”–the Dow Jones Industrial average crashed more than 11.7%. This immediately followed “Black Thursday” and “Black Monday”; the three dates are considered to be the “first taste” of the Great Crash that followed. On October 30, 1929 John. D. Rockefeller Sr. attempted to reassure investors, stating “There is nothing in the business situation to warrant the destruction of values that has taken place on the exchanges during the past week. My son and I have for some days been purchasing sound common stocks.” Subsequently, DJIA rose more than 12% that day. The Dow, however, would go on to lose more than 80% before bottoming in 1932.
4. September 21, 1932: Farmers Get a Helping Hand (11.4%)
On September 21, 1932, DJIA rallied nearly 11.5% after news that the Reconstruction Finance Corporation (RFC) would expand its authority to aid farms. The RFC was originally created by the U.S. government to aid the troubled banking system, offering emergency loans to banks in danger of failing. Eventually, its role expanded to helping not only farmers, but also railroads and other companies all the way up until World War II.
5. October 13, 2008: Central Banks Come to the Rescue (11.1%)
The Dow Jones Industrial Average advanced more than 11% on October 13, 2008. The rally was spurred by a collaborative effort of central banks across the globe to install an aggressive, coordinated campaign to improve liquidity in the financial system. Officials had stated over the weekend that they would flood the system with billions of dollars in liquidity and provide capital for troubled banks.
6. October 28, 2008: Investors Think Stocks are Cheap (10.9%)
Only a week or so after a record closing, the DJIA once again rallied, gaining 10.9% during the October 28, 2008 session. There was no single catalyst for the surge, but analysts attributed the rally to investors wanting to buy up equities, which had become too cheap to resist. Wall Street was also looking forward to a Fed policy announcement later that day; investors were expecting the Fed to cut interest rates again.
7. October 21, 1987: Two Days After Black Monday (10.1%)
Only two days after Black Monday, where the DJIA recorded its worst single session lost, the index managed to rally more than 10%. On Black Monday, investors saw the index tumble 22.6%. As fear over computerized trading programs and inflation abated, investors once again poured into the market, pushing the DJIA up 10% on October 21, 1987.
8. February 11, 1932: Secretary of the Treasury Resigns (9.5%)
On February 10, 1932 Secretary of the Treasury Andrew Mellon submitted his resignation. Following the news, the DJIA rallied almost 10%. Mellon became unpopular with the onset of the Great Depression (he advised Hoover to “liquidate labor, stocks, farmers, etc to purge the rottenness out of the system”). Furthermore, Mellon was in the middle of a scandal after it was discovered that he financed a protest against Hoover. This, combined with impeachment hearings against Mellon, forced him to resign. Obviously, investors were thrilled with his decision.
9. August 3, 1932: Secretary of Commerce Resigns (9.5%)
On August 3, 1932, the DJIA rallied 9.5%, the same day Secretary of Commerce Robert Lamont announced his resignation. Many, however, do not attribute Lamont’s resignation to the session’s rally, as bullish momentum had already begun creeping back into the market for nearly a month.
10. December 18, 1931: Markets Bounce Back on Rumors (9.4%)
On December 18, 1931, the DIJA rallied 9.4%. The rally followed several days of sell-offs, when investors turned hopeful after it was reported that a group of Wall Street bankers entered into a “loose-jointed” agreement to buy stocks at bargain prices in an effort to move the market in a positive direction.
The Bottom Line
This in-depth look at the Dow’s 10 best trading days helps us to see the upside potential, caused primarily by some relevant economic events, of big stock indices like the Dow.
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