The worst stock market days in history

When the stock market takes a nosedive, headlines fly, and panic can spread fast. Historically, such dramatic drops have had a significant impact on the financial world, sparking changes in how markets operate.

What can we learn from these events? Below, we’ve broken out the worst single-day percentage drops across three major U.S. indexes — the Dow Jones Industrial Average (DJIA), S&P 500, and Nasdaq Composite — followed by a closer look at what caused some of the biggest declines.

Worst days for the Dow Jones Industrial Average (DJIA)

Note: The DJIA began in 1897.

Worst days for the S&P 500

Be a financially smart family!

Be a financially smart family!

From saving for the future to understanding credit, see how families are thriving with Greenlight.

Try Greenlight today

Note: The S&P 500 began in 1957. Source details here. 

Worst days for the Nasdaq Composite

Note: The Nasdaq Composite began in 1971. 

What happened on these days?

Black Monday — October 19, 1987

This was the biggest one-day market crash in U.S. history. The Dow fell more than 22% in a single day — imagine losing over a fifth of your investment portfolio overnight. This wasn’t due to any single event, but rather a combination of computerized trading, investor fear, and overvalued stock prices that triggered a domino effect. The crash was sharp and scary, but the market bounced back relatively quickly, within two years.

COVID-19 panic — March 2020

In March 2020, as the world realized COVID-19 would change everything, markets panicked. With businesses closing, travel halting, and fear rising, investors rushed to sell their assets. On multiple days that month, the Dow, S&P 500, and Nasdaq all experienced record declines. However, it wasn't permanent — once government support was in place and people adjusted to the "new normal," markets began to recover much faster than many had expected.

The Great Depression begins — October 1929

In the late 1920s, many Americans invested in stocks without fully understanding them – often borrowing money to do so. When confidence dropped, people rushed to sell, leading to back-to-back crashes. The result? The Great Depression was a decade-long economic downturn marked by widespread unemployment and hardship. It was a harsh lesson on the dangers of speculation and the importance of financial safeguards.

Learn the difference between a recession and a depression. 

Financial crisis — 2008

A housing market bubble and risky lending practices caused the 2008 crash. Banks had loaned money to people who couldn't afford to repay it, and when the housing market collapsed, it triggered a chain reaction. Major banks failed, credit dried up, and markets dropped sharply. It affected jobs, retirement accounts, and home values, and took years to recover from. The government eventually intervened with massive bailouts to stabilize the situation.

Dot-com crash — April 14, 2000

In the late '90s, tech stocks were booming — even companies with no profits received huge investments just because they had a '.com' in their name. When investors realized the hype was unsustainable, prices dropped rapidly. On April 14, 2000, the Nasdaq stock market index plummeted nearly 10%. It was a reminder that while innovation is exciting, investing always carries risk — especially when things seem too good to be true.

What we can take away

Looking back at these drops, one thing becomes clear: the stock market can be unpredictable, but that doesn't mean it's broken. From Black Monday to the COVID crash, the market has shown that while short-term losses can be steep, long-term recovery is often possible.

These events highlight a few key lessons:

• Panic selling rarely helps. When markets drop, it's tempting to sell to avoid more losses. But selling in a panic often means locking in those losses instead of giving your investments time to recover.

• Diversification matters. If all your money is in one type of stock or sector, a bad day for that area can hit you hard. Spreading your investments out can help cushion the blow when the market dips.

• Understanding your risk tolerance is key. Not everyone can stomach big swings in their investments, and that's okay. Knowing how much risk you're comfortable with helps you make choices you can stick with, even during tough times.

• Invest with a plan. It's easy to get caught up in hot trends, but building a long-term investment strategy around your personal goals, like buying a house or saving for retirement, helps you stay focused and avoid chasing hype.

• Understanding what you invest in is crucial. Some of the worst crashes happened when people invested in things they didn't fully understand. Taking time to learn the basics can help you make smarter decisions.

• Big crashes can lead to big reforms. Financial crises often spark change, such as stronger regulations or improved investor protections. While painful, they can help shape a more stable future.

Be a financially smart family! From saving for the future to understanding credit, see how families are thriving with Greenlight. Try Greenlight, one month, risk-free.†

This blog post is provided "as is" and should not be relied upon as a substitute for professional advice. Some content in this post may have been created using artificial intelligence; however, every blog post is reviewed by at least two human editors.

†Valid for new customers only. Subject to identity verification and minimum load requirements. Your first monthly fee will be billed to your parent wallet seven days after successful registration. To receive a refund of your first monthly fee, you must request to close your account on or before the day immediately preceding your first Monthly Billing Date. See the ‘Account’ tab of Settings by tapping the gear icon on the Greenlight app home page to confirm when your risk-free trial ends. See Terms for details.