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Encyclopedia > Stock market downturn of 2002

The stock market downturn of 2002 (some say "stock market crash" or "the Internet bubble bursting") is the sharp drop in stock prices during 2002 in stock exchanges across the United States, Canada, Asia, and Europe. After recovering from lows reached following the September 11, 2001 attacks, indices slid steadily starting in March 2002, with dramatic declines in July and September leading to lows last reached in 1997 and 1998. The dollar declined steadily against the euro, reaching a 1-to-1 valuation not seen since the euro's introduction. Black Monday (1987) on the Dow Jones Industrial Average A stock market crash is a sudden dramatic loss of value of shares of stock in corporations. ... Dot-com (also dotcom or redundantly dot. ... For the Cusco album, see 2002 (album). ... Asia is the largest and most populous region or continent depending on the definition. ... World map showing Europe Europe is conventionally considered one of the seven continents of Earth which, in this case, is more a cultural and political distinction than a physiogeographic one. ... A huge plume of smoke and fire can be seen emerging from the North Tower. ... A stock market index is a listing of stocks, and a statistic reflecting the composite value of its components. ... 2002 : January - February - March - April - May - June - July - August - September - October - November - December A timeline of events in the news for March, 2002. ... 1997 (MCMXCVII in Roman) is a common year starting on Wednesday of the Gregorian calendar. ... 1998 (MCMXCVIII) was a common year starting on Thursday of the Gregorian calendar, and was designated the International Year of the Ocean. ... The dollar (represented by the dollar sign: $) is the name of the official currency in several countries, dependencies and other regions. ... The euro (plural euro, symbol: €; banking code: EUR) is the official currency of the European Union and single currency for over 300 million Europeans in the following twelve European Union member states: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain; collectively also known as...


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. In fact, some Internet companies (Webvan, Exodus Communications, and Pets.com) went bankrupt. Others (Amazon.com, eBay, and Yahoo!) went down dramatically in value, but remain in business to this day and have generally good long term growth prospects. An outbreak of accounting scandals (Enron, Arthur Andersen, Adelphia, and WorldCom) was also factor to the speed of the fall, as numerous large corporations were forced to restate earnings (or lack thereof) and investor confidence suffered. The September 11 attacks also contributed heavily to the stock market downturn, as investors became unsure about the prospect of terrorism affecting the United States economy. A bear market is a prolonged period of time when prices are falling in a financial market. ... A bull market is a prolonged period of time when prices are rising in a financial market faster than their historical average. ... Webvan was an online credit and delivery grocery business that went bankrupt in 2001. ... // Early History: Founding Fathers In the mid-1990s, B.V. Jagadeesh and his partner K.B. Chandrasekhar hadnt considered obtaining venture funding in Chicago for the Internet data center startup they were building 2,000 miles west of it in Silicon Valley. ... Pets. ... Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. ... Amazon. ... eBay Inc. ... Yahoo! Inc. ... Accounting scandals, or corporate accounting scandals are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations. ... Enron Corporation Enron Corporation is an energy trading and communications company based in Houston, Texas that employed around 21,000 people in mid-2001 (before bankruptcy). ... Arthur Andersen LLP, based in Chicago, Illinois, had once been one of the Big Five accounting firms and performed auditing, tax, and consulting services. ... Adelphia Communications Corporation (OTCBB: ADELQ), named after the Greek word for brotherhood, was the sixth largest US cable television operator before it filed for bankruptcy in 2002 due to internal corruption. ... For a time, WorldCom (WCOM) was the United States second largest long distance phone company (AT&T was the largest). ... It has been suggested that Terrorist be merged into this article or section. ... The United States has the largest and one of the most technologically advanced national economies in the world, with a GDP of 13. ...


The International Monetary Fund had expressed concern about instability in United States stock markets leading up to the sharp downturn. The logo of the International Monetary Fund (IMF) The International Monetary Fund (IMF) is the international organization entrusted with overseeing the global financial system by monitoring exchange rates and balance of payments, as well as offering technical and financial assistance when asked. ... The word stability has a number of technical meanings, all related to the common meaning of the word. ...


The Nasdaq stock market peaked on March 10, 2000, hitting an intraday high of 5132.52. It eventually closed at 5,048.62 . The Dow Jones Industrial Average, an average of 30 large companies on the New York Stock Exchange, peaked on January 14, 2000. Its intraday peak was at 11,750.28 but closed at 11,722.98. A year later, it was largely unchanged with another peak of 11,337.92 (intra-day peak 11,350.05) on May 21, 2001. NASDAQ (originally an acronym for National Association of Securities Dealers Automated Quotations ) is a U.S. electronic stock exchange. ... March 10 is the 69th day of the year in the Gregorian Calendar (70th in Leap years). ... This article is about the year 2000. ... The 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. ... New York Stock Exchange (June 2003) The New York Stock Exchange (NYSE) , also nicknamed the Big Board, is by far the largest stock exchange in the world (by dollar volume) and second largest by number of listings. ... January 14 is the 14th day of the year in the Gregorian calendar. ... This article is about the year 2000. ... May 21 is the 141st day of the year in the Gregorian calendar (142nd in leap years). ... 2001: A Space Odyssey. ...


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. 1987 (MCMLXXXVII) was a common year starting on Thursday of the Gregorian calendar. ... 1995 (MCMXCV) was a common year starting on Sunday of the Gregorian calendar. ... The 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. ... A bear market is a prolonged period of time when prices are falling in a financial market. ...


After falling for 11 consecutive 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. July 23 is the 204th day (205th in leap years) of the year in the Gregorian Calendar, with 161 days remaining. ... NASDAQ (originally an acronym for National Association of Securities Dealers Automated Quotations ) is a U.S. electronic stock exchange. ...

Contents


Scale

The Dow 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 in January 1, 2001, at 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, and the Nasdaq had lost 44% of its value from its peak. September 24 is the 267th day of the year (268th in leap years). ... October 6 is the 279th day of the year (280th in Leap years). ...


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


At the top in March of 2000 all NYSE listed companies was priced at $12.9 trillion and all NASDAQ listed companies was priced at $5.4 trillion, for a total listed company value of $18.3 trillion. NASDAQ subsequently fell by 80% and the S&P 500 fell by 45% until October 2002. NYSE and NASDAQ companies did then cost $7.2 trillion. That's a $9.3 trillion fall in market cap (18.3-9=9.3) at NYSE and Nasdaq. New York Stock Exchange (June 2003) The New York Stock Exchange (NYSE) is one of the largest stock exchanges in the world. ... NASDAQ (originally an acronym for National Association of Securities Dealers Automated Quotations ) is a U.S. electronic stock exchange. ... The S&P 500 is a list of 500 US corporations, ordered by market capitalization. ... Market capitalization, often abbreviated to market cap, mkt. ...


Index levels

To put the downturn of 2002 in perspective, here is a look at U.S. stock market declines in 2000, 2001, and 2002: Chart of the Dow Jones Industrial Average during 2002. ... Chart of the Nasdaq Composite during 2002. ... This article is about the year 2000. ... 2001: A Space Odyssey. ... For the Cusco album, see 2002 (album). ...

  • 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: A stock market bubble is a type of economic bubble taking place in stock markets, in which a wave of public enthusiasm, evolving into herd behavior, causes an exaggerated bull market . ...

Date Nasdaq % Chng.§ Dow Jones % Chng.§ Notes
January 1, 1997 1,291.03 6,448.30
January 1, 1998 1,570.35 +21.63% 7,908.30 +22.64%
January 1, 1999 2,192.69 +39.63% 9,181.40 +16.10%
January 1, 2000 4,069.31 +85.58% 11,497.10 +25.22%
January 14, 2000 4,064.27 -0.12% 11,723.00 +1.97% The day the DJIA peaked.
March 10, 2000 5,048.62 +24.22% 9,928.80 -15.31% The day the Nasdaq peaked.
January 1, 2001 2,470.52 -51.07% 10,788.00 +8.65%
January 20, 2001 2,770.38 +12.14% 10,587.60 -1.86% President Bush takes office.
September 10, 2001 1,695.38 -38.80% 9,605.50 -9.28% Levels before September 11, 2001 attacks.
September 21, 2001 1,423.19 -16.05% 8,235.80 -14.26% Lows after markets reopened.
January 1, 2002 1,950.40 +37.04% 10,021.60 +21.68%
October 9, 2002 1,114.11 -42.88% 7,286.27 -27.29% 2002 lows.
January 1, 2003 1,335.51 +19.87% 8,341.63 +14.48%
January 1, 2004 2,003.37 +50.01% 10,453.92 +25.32%
§Values represent percent change from previous date listed in table.

A huge plume of smoke and fire can be seen emerging from the North Tower. ...

See also

The United States has the largest and one of the most technologically advanced national economies in the world, with a GDP of 13. ...

References and external links

  • Rally Sends Major Gauges to Gains of More Than 5%, The New York Times, July 30, 2002
  • NEWS ANALYSIS: What Will Halt the Skid on Wall Street?, The New York Times, July 22, 2002
  • The Confidence Crisis, The New York Times, July 21, 2002
  • Stocks Continue Four-Month Rout; Dow Plunges 390, The New York Times, July 20, 2002
  • MARKET PLACE: Adding to Loss of Investments, a Loss of Faith in the Market, The New York Times, July 20, 2002
  • SCREAM! Hold On for a Wild Ride, The New York Times, July 21, 2002
  • S.&P. 500 Index Drops to Its Lowest Level Since 1997, Bloomberg News, July 19, 2002
  • Doubts about US political leadership

  Results from FactBites:
 
Stock Market Course (790 words)
Stock market bubble - A stock market bubble is a type of economic bubble taking place in stock markets, in which a wave of public enthusiasm, evolving into herd behavior, causes an exaggerated bull market.
Stock market downturn of 2002 - The stock market downturn of 2002 (some say "stock market crash" or "the Internet bubble bursting") is the sharp drop in stock prices during 2002 in stock exchanges across the United States, Canada, Asia, and Europe.
Stock market - A stock market is a market for the trading of company stock, and derivatives of same; both of these are securities listed on a stock exchange as well as those only traded privately.
  More results at FactBites »

 
 

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