Major events, including natural disasters, political happenings and wars, can have a major effect on the stock market. While some events may seem like they would be tragic for the Dow 30, there are many occurrences in which the Dow was not negatively affected. On the flipside, some of these events have contributed to one of the U.S. recessions. Below is a list of major events and their effects on the Dow.
Oklahoma City Bombing: April 19, 1995
Following the bombing of an office building in Oklahoma City, the Dow closed up 0.70%. Despite this major tragedy, the event had no major effect on the Dow 30.
September 11th Attacks: September 11, 2001
When the market re-opened on September 17, the Dow 30 plummeted over 7% – the eighth worst day in history for the Dow. Five days after the market reopened, the Dow was down a total of 15%. This attack contributed to the start of the early 2000s recession. See also 7 Events That Closed the NYSE.
Tsunami in Japan: March 11, 2011
The Dow took a dip when the tragic tsunami hit Japan in 2011, but it was quick to recover. Although the Dow 30 was not majorly affected, this event took a major toll on the Asian markets.
Hurricane Sandy: October 31, 2012
Hurricane Sandy caused the New York Stock Exchange to close for two days – the first time the market closed since 9/11 and the first weather-related closing since Hurricane Gloria in 1985. After the storm ripped through New Jersey and New York, the market was positive, but quickly dipped.
Eisenhower’s Heart Attack: September 24, 1955
The Dow plunged after the news of Eisenhower’s heart attack. By the following month, there had not been much recovery from the initial decline [see also The Ten Commandments of Dividend Investing].
Assassination of JFK: November 22, 1963
Following the mid-day assassination of John F. Kennedy, the Dow fell almost 3%. Soon after the president was killed, the New York Stock Exchange closed at 2:07 p.m to avoid continued shock to the market.
Resignation of Nixon: August 9, 1974
The day that Richard Nixon became the first U.S. president to resign, the Dow fell 1%. By the beginning of September, the Dow had fallen over 15%.
Attempted Assassination of Ronald Reagan: March 30, 1981
When President Ronald Reagan was shot on March 30, 1981, the stock markets were closed before they were given the opportunity to fall. During the days that followed the attempted assassination, the Dow rose over 7%.
The Dow fell 3.5% the day after the Pearl Harbor attack. The event that sent the U.S. into World War II sent the Dow falling for the next few days after the attack, but it began to rebound by the next month.
World War II
The Dow skyrocketed at the beginning on the War, but it took a huge hit in May 1940 when Germany invaded Western Europe. The Dow continued to decline until May 1942 when the Dow hit its WWII all time low.
The Dow’s first reaction after the Gulf War began was to rise, but it quickly dipped. In December 1990, the Dow hit its low for the Gulf War, but rose for the rest of the war.
The Bottom Line
While all of these events were overtly negative, only the day the market re-opened after the 9/11 attacks can be considered one of the 10 worst Dow days since the Great Depression. Major events can spook investors, but the overall market does not take all bad news negatively. For long-term dividend investors it is important to pay attention to major events, but to not be spooked too easily.