New Second Biggest Bear Market S&P sank to 1997 low, lost 52 percent from the 2007 peak
November 20, 2008
U.S. stocks nose-dived yet again on Thursday, as investors' deepening economic fears drove the S&P 500 index crashing through its 2002 bear-market low to its lowest level in more than 11 years, since April 14, 1997. The closing low of the S&P last bear market was 776 on October 9, 2002. The drop completed the removal of more than a decade of stock market gains.
The S&P 500 Index lost 6.71 percent to 752.44. This level is more than 52 percent below its October 9, 2007 all-time closing high, making the current bear market the second biggest on record. The current decline is exceeded only by the 83 percent drop between 1930 and 1932. The S&P 500 had not lost more than 50 percent of its value in a bear market since 1937.
The Dow Jones industrial average plunged 5.56 percent to 7,552.29. The Nasdaq Composite Index slid 5.07 percent to 1,316.12. Both the Dow and Nasdaq closed at their lowest points since March 12, 2003, which was just above the low of the last bear market.
The Dow has lost nearly 47 percent since closing at an all-time high of 14,164.53 on the October 9, 2007. Meanwhile, the Nasdaq has lost 54 percent since hitting a bull market high of 2,859.12 on October 31, 2007.
On Wednesday, stocks were crushed to 5 1/2-year lows, with credit market-led fears punishing markets.
Investors had plenty of news to feed their fears about the health of the economy and the financial sector.
The yield on the 3-month Treasury bill, the safest place to put money in the short term, fell to 0.015 percent. The low yield means nervous investors would rather preserve their money despite little or no interest rather than risk the stock market.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to a five-year low of 3.14 percent, down from 3.33 percent late Wednesday. The yield on the 2-year fell to a record low below 1 percent. Treasury prices and yields move in opposite directions.