Market Overview

8 Years Ago Today, The Dow Had Its Worst Day Ever

8 Years Ago Today, The Dow Had Its Worst Day Ever

#TBT: Eight years ago today the Dow suffered its largest one-day decline in history.


Investors were obviously on edge back in September 2008, as the signs of a financial crisis are well known. Monday, September 29, 2008, actually started off on a somewhat positive note, as Citigroup said it would acquire Wachovia's banking operations following a brief bidding war with Wells Fargo. Investors assumed, albeit briefly, that the acquisition implied Wall Street can work out its issues without the need for government intervention.

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A $700 billion financial rescue bill, which was designed over the prior weekend, went to the U.S. House for a vote. Meanwhile, the Federal Reserve promised to infuse $330 billion of liquidity into the market.

The bill, named TARP or Troubled Asset Relief Program, was a program from the U.S. government to buy "toxic assets" from financial institutions. These "toxic assets" included illiquid, difficult to price assets from banks and other financial institutions.

Things turned ugly — and very quickly — in the afternoon after reports surfaced the House rejected the financial rescue bill.

The Dow Jones ended the day lower by 7 percent the S&P lost 8.8 percent and the Nasdaq index plummeted 9.1 percent. Once the trading day was over, the U.S. market erased more than $1 trillion in shareholder value in a single day for the first time ever.

"This is panic and ... fear run amok," Zachary Karabell, president of River Twice Research, told CNBC eight years ago. "Right now we are in a classic moment of a financial meltdown."

More than $1 trillion in shareholder value was wiped out for the first time ever in a single day as the Dow lost 7 percent.

The TARP program was signed into law on October 3, 2008, but at a reduced amount of $475 billion. By the end of December, 2014, the U.S. government sold its last remaining asset it bought during the financial crisis, holdings of Ally Financial, which marked the end of the TARP program.

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Posted-In: Financial Crash September 29 2008 Stock Market Crash TARPBroad U.S. Equity ETFs Education ETFs General Best of Benzinga


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