Christopher Malloy, a trader with Kellogg Capital, worked the New York Stock Exchange Friday. Many traders are too young to remember the last time the Dow rebounded so quickly from a recession low.
(Mark Lennihan/AP)Photos (1 of 1)
Dow’s rebound most explosive in 34 years
By Laurent Belsie | 08.07.09
Not since 1975 have US stocks rebounded so quickly and explosively from a recession low.
On Friday, the Dow Jones Industrial Average logged its fourth straight weekly gain, after a government report showed that the economy lost far fewer jobs than expected. Since its March low of 6547 points, the index has now climbed to 9370 as of Friday’s close. That’s a 43 percent gain in five months.
The speed of such rebounds has often depended on the size of the plunges that preceded them. In the relatively mild 1990-91 and 2001 recessions, it took more than a year for the Dow to gain 43 percent.
It took six months for the Dow to make that climb in the much more severe 1981-82 downturn.
The current five-month, 43 percent spurt was nearly identical to the Dow’s rise from the depths of the 1973-75 recession, when the US was battling the inflationary aftermath of the first Arab oil embargo, Detroit was in trouble, and a new president (Gerald Ford) had recently taken over the reins.
Other indexes made big gains on Friday, too. The S&P rose 13 points to close at 1010, cracking the 1000 level this week for the first time since last November. The Nasdaq gained 27 points to close at 2000, cracking that level this week for the first time since last October.
Comments
2. Thomas Savarese | 08.10.09
Now don’t all those people that panicked and sold their equity mutuals and stocks every day a few months back feel stupid. They locked in their losses and only brought the market down lower…
3. Don Ham | 08.12.09
“Sold in panic”. Nonsense. The vast majority of the selling was forced by margin calls, hedge fund redemptions, and even endowment fund forced selling. It had everything to do with leverage and very little to do with panic selling and stupidity.
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1. Frederic Lamb | 08.10.09
Faith reestablished!! Bravo!!!