Market History Dot Com Bubble Guide

Dot Com Bubble, Dotcom Bubble, Dot Com Crash & AI Bubble Comparison

Learn what drove the dot com bubble, how the dot com crash unfolded, and how today’s AI bubble comparisons fit into market history.

Section: Market Overviews Published: 2026-03-07 Updated: 2026-03-07

26 Year Analysis of the SPY -/+2% Movements

The goal of this analysis is to log particularly (±2%) volatile days on the SPY of the past 26 years, as well as provide a better understanding of what events influenced the markets to move dramatically. The decision to start at the beginning of the Dotcom Bubble was mostly to analyze the events of the “new” century, which, thanks to significant technological and economic changes, has a unique character compared to the century before. Hopefully, events of the past can shine a light on critical points to pay special attention to in the future. The SPY has been chosen due to the fact that it corresponds better to the general market, rather than sell-offs in specific sectors like the NASDAQ.

Volatility is tracked in an ascending calendar order; many smaller movements would have contributed to more dramatic ones, but in the interest of keeping a reasonable sample size, these must be glossed over. For ease of use, the time frames have been split based on significant economic events or terms of specific Presidents for outliers.

The numbers are sourced from Investing.com.

Dot-com Bubble & 9/11 Burst 03/2000-10/2002

SPY Up Days
Apr 17, 2000 +3.30%	Apr 18, 2000 +2.87%	Apr 25, 2000 +3.32%	May 15, 2000 +2.21%
May 30, 2000 +3.23%	Oct 13, 2000 +3.34%	Oct 19, 2000 +3.48%	Oct 31, 2000 +2.19%
Nov 14, 2000 +2.35%	Dec 05, 2000 +3.89%	Dec 22, 2000 +2.44%	Apr 05, 2001: +4.37%
Apr 10, 2001: +2.71%	Apr 18, 2001: +3.89%	Mar 27, 2001: +2.56%	May 16, 2001: +2.85%
Jul 12, 2001: +2.36%	Sep 24, 2001: +3.90%	Sep 28, 2001: +2.19%	Oct 03, 2001: +2.00%
Oct 10, 2001: +2.29%	Nov 01, 2001: +2.29%	Dec 05, 2001: +2.23%	Mar 01, 2002: +2.27%
Apr 16, 2002: +2.35%	May 08, 2002: +3.74%	May 14, 2002: +2.11%	Jun 17, 2002: +2.87%
Jul 05, 2002: +3.67%	Jul 24, 2002: +5.73%	Jul 29, 2002: +5.42%	Aug 06, 2002: +3.00%
Aug 07, 2002: +2.00%	Aug 08, 2002: +3.27%	Aug 14, 2002: +4.00%	Aug 19, 2002: +2.36%
Sep 25, 2002: +2.49%	Oct 10, 2002: +3.49%	Oct 11, 2002: +3.91%	Oct 15, 2002: +4.74%
Oct 17, 2002: +2.23%	Sep 28, 2000 +2.22%	Mar 16, 2000 +4.76%	Mar 9, 2000 +2.56%
	Mar 15, 2000 +2.43%	Mar 21, 2000 +2.56%

SPY Down Days
Apr 12, 2000 -2.23%	Apr 14, 2000 -5.82%	May 03, 2000 -2.16%	May 10, 2000 -2.06%
May 19, 2000 -2.10%	Jul 28, 2000 -2.05%	Oct 12, 2000 -2.63%	Oct 25, 2000 -2.37%
Nov 10, 2000 -2.44%	Nov 30, 2000 -2.00%	Dec 15, 2000 -2.14%	Dec 20, 2000 -3.13%
Jan 2, 2001 -2.8%	Jan 5, 2001 -2.63%	Mar 09, 2001 -2.47%	Mar 14, 2001: -2.59%
Mar 20, 2001: -2.41%	Mar 28, 2001: -2.44%	Apr 03, 2001: -3.44%	Apr 06, 2001 -2.00%
Jul 06, 2001: -2.35%	Sep 06, 2001 -2.24%	Sep 17, 2001 -4.92%	Sep 20, 2001: -3.11%
Oct 29, 2001: -2.38%	Jan 29, 2002: -2.87%	Feb 04, 2002: -2.48%	Apr 11, 2002: -2.37%
Jun 03, 2002: -2.47%	Jul 01, 2002: -2.14%	Jul 02, 2002: -2.12%	Jul 09, 2002: -2.48%
Jul 10, 2002: -3.39%	Jul 18, 2002: -2.69%	Jul 19, 2002: -3.83%	Jul 22, 2002: -3.29%
Jul 23, 2002: -2.71%	Aug 01, 2002: -2.95%	Aug 02, 2002: -2.32%	Aug 05, 2002: -3.43%
Aug 13, 2002: -2.17%	Aug 23, 2002: -2.26%	Sep 03, 2002: -4.16%	Sep 12, 2002: -2.48%
Sep 19, 2002: -3.01%	Sep 27, 2002: -3.23%	Oct 02, 2002: -2.36%	Oct 04, 2002: -2.25%
Oct 09, 2002: -2.72%	Oct 16, 2002: -2.42%

Summary

The catalyst for the Dotcom crash came from extremely overvalued companies, and the selloffs continued due to actual earnings reports consistently disappointing. The FED played a very active role in managing the economy and caused a great amount of damage to the market. Despite trying to manage inflation and pushing hikes as late as May of 2000, by December of that same year, the FED was announcing planned rate cuts as a result of a worsening economy! In about half a year, the FED managed to muzzle a booming economy and contributed to its nosedive in record time.. 9/11 came along and introduced a very high amount of fear & uncertainty into the market, with no shortage of concerns over additional terrorist attacks or new wars. What really sent the market to new lows were events like the Enron scandal, which confirmed the worst fears of many investors, that companies were cooking their books throughout the period leading up to the Dotcom crash. Thanks to consistently poor earnings reports or earnings revisions, the selling continued, though after the market kept reaching new lows, sentiment seems to have changed for the positive. Volatility continued after this period, but the worst had come to pass.

Key Data to Look Out for:

Overvalued Companies, high P/E ratios

Company earnings

Antitrust and SEC litigation

Fraud investigations

FED comments and announcements

2000

March: Mar 9th (+2.56%) Mar 15th (+2.43%) Mar 16th (+4.76%) Mar 21st (+2.56%)

In 1999, the NASDAQ had risen 86%, ultimately peaking on March 10th of 2000. On 3/9, the NASDAQ had broken through the 5,000 mark and a general market rally occurred that day. According to the NYT, no obvious triggers existed, the market had been hot and was looking to keep going up wards. By 03/15, the NASDAQ had lost 9.2% in three days leading up. Meanwhile, the SPY and DOW rose, with money fleeing poor‑earnings internet companies and moving into safer blue‑chip companies. A quote that did not age well from this day: Jeff Rubin, research director at Birinyi Associates, agreed, calling the recent action ''your standard, run-of-the-mill Nasdaq correction, which we have every year”. 3/16 saw a general market rebound, with money continuing to flow into “old economy” stocks, but tech also received some investor attention.A contributing factor to the rise was a slowdown in industrial output, which had been growing rapidly. The thinking went, that a slowdown in growth will reduce the chances of a rate hike. It’s worth noting that the general opinion was that the American economy was still in a healthy state at this time.

On 3/21, the broad market went up again, following another sell off in the NASDAQ in the days before.The key news here was an increase of 0.25% in the federal funds rate, which investors were pleased to see was not any worse. The FED also suggested that additional rate hikes were in the pipeline. A particularly ill fated quote was mentioned on this day; ''This is a big correction, but nothing more than that. It gives everyone a better chance to evaluate what is out there, and presents good opportunities to buy the better stocks.'' This quote came from Robert Turner, head of Turner Investment Partners, a firm that was predominantly invested in tech companies with $10 billion AUM. General Electric announced it would modestly exceed consensus estimates, further reinforcing the health of the economy. Goldman Sachs also posted much better than expected earnings.

Apr 12th (-2.23%), Apr 14th (-5.82%), Apr 17th (+3.30%), Apr 18th (+2.87%), Apr 25th (+3.32%)

By the close of 4/12, the NASDAQ hit -25% from its peak and this was the first volatile day where investors began to flee the market, rather than just pivoting out of tech.. Comments from the FED suggested additional rate-hikes to combat inflation, Motorola suggested a poor earnings turnout, and a tax deadline was days away.4/14 was a day of historic losses, when the NASDAQ posted another historic decline of nearly 9%, after five straight days of losses. Fear was already permeating the market, but the immediate catalyst was a Labor Department report showing a broad surge in consumer prices (confirming inflation worries), raising concerns that the upcoming Federal Reserve meeting would bring another interest‑rate hike. Worries that the entire economy was on shaky grounds, rather than just technology, began to take form.Making matters worse were the actions taken by the FED, which had been attempting to slow down the economy, apparently, since June of 1999. It did accomplish this objective in the end.

4/17, sentiment turned bullish, despite a huge drop in Asian markets over the weekend. The only thing that kept markets up was statements from officials in Washington, who were emphasizing that there was nothing wrong with the economy. Analysts and money managers were also towing the company line, inflation was still under control and company earnings were strong.An astute quote from Henry Blodgett on that day; "If the sentiment really turns negative, there is no floor on companies that don't have earnings you can point to". Buyers carried the momentum into 04/18, but a key point, internet-based stocks continued to lag while blue‑chip names recovered more decisively. That said, solid earnings from Intel, America Online, Pfizer, and Johnson & Johnson all contributed to optimistic buying.

By late April, the NASDAQ had been crushed for weeks, down more than 20–30%, despite intermittent rallies. There doesn’t seem to be a concrete reason for the substantial gain on 4/25, according to the NYT. Instead, the rally was noted as strange, since the next day would see the government release first-quarter employment cost and gross domestic product data, which would provide keen insight into the overall health of the economy. Kenneth Sheinberg asks; ''Could this be another bear trap or sucker rally?'' April had seen 3 of the 10 largest daily gains in Nasdaq history, as well as 4 of its largest declines

May: May 3rd (-2.16%), May 10th (-2.06%), May 15th (+2.21%), May 19th (-2.10%), May 30th (+3.23%)

05/03 was an odd day. The government reported higher than expected factory orders, with productivity and labor market reports due immediately after. Concerns that the economy was actually doing too well fomented fears of rate hikes meant to curtail uncontrolled expansion of growth. Walmart and other retail chains were downgraded by Goldman Sachs, but the real stress was focused on interest hikes, which were now thought to be larger than expected due to the health of the economy. Who would have thought?

The much feared 5/16 FED meeting, led to continued anxiety on the market on 5/10. Cisco Systems beat earnings, but still suffered a sell off. The only winners were bear market “safe” companies, like miners and utility companies. In a twist of fate, a day before the meeting on 05/15, the market seems to have largely gotten over its rate hike worries. The overall economy, after all, was still healthy, and the volatility leading up to it had created good buying opportunities. Most analysts were confident that inflation was being appropriately managed and not many hikes were in the pipeline. With the FED increasing rates by 50 basis points (on 5/16), investor concern over additional hikes throughout the year set in once again. So, the market slumped on 5/19. Renewed optimism for tech companies saw a massive NASDAQ and overall market rally on 5/30. Lehman Brothers issued bullish reports on the semiconductor industry, tech companies around the world were closing deals, and even Goldman Sachs claimed investment banking profits were on the up and up. The market appeared to be healing.

July: Jul 28th (-2.05%)

Volatility, on a small scale, had continued since May but a bigger jump reared its head on 7/28. Echoing concerns from May, as reports once again came out that the US economy was growing faster than expected and a need existed to slow growth before inflation renewed. Additional hikes were sure to follow. Two noteworthy quotes came up. ''If the consumer looks like he is ramping up again, then that is a threat,'' said James E. Glassman, senior United States economist at Chase Manhattan Bank. ''Signs of a slowing economy are hard to find in this latest batch of numbers,'' said Donald J. Fine, chief market analyst at Chase Asset Management. The lesson here is that good economic data can sometimes lead to a bad day on the market, in and of itself.

September: Sep 28th (+2.22%)

By 9/28, a trying quarter was nearly at an end, and poor corporate earnings expectations were dashed by Procter & Gamble, which provided reassuring comments about its earnings. This reprieve gave investors hope and there doesn’t seem to be a reason for the buying aside from that. This hope was summarily crushed just after market close. Apple posted its single worst day in market history, losing nearly 50% of its market cap in a single day! The market was nowhere near out of the woods, despite hopes that only this quarter would be rough.

October: Oct 12th (-2.63%), Oct 13th (+3.34%), Oct 19th (+3.48%), Oct 25th (-2.37%), Oct 31s t(+2.19%)

With tech earnings continuing to disappoint, markets dropped on 10/12. Home Depot fell 28%, and suicide bombers attacked a U.S. Navy destroyer in Yemen. Lucent Technologies, Intel, and Dell also posted poor earnings forecasts. The following day, 10/13, the NASDAQ surged 8%, primarily led by better than expected earnings from Gateway, Juniper Networks, and PMC-Sierra. Sentiment was still somewhat uncertain, but many couldn’t resist the bargains. The rebound continued on 10/19, with Nokia delivering an excellent earnings report and predicting a “record” 4th quarter to come. The market dropped again less than a week later, 10/25, as Nortel Technologies posted good but weaker than expected earnings. With uncertainty in the Middle East still continuing and oil prices still standing high, the selling commenced. On 10/31, the markets saw a huge rally after the market nearly dipped into bear market territory, NASDAQ continued to slump, but investors rushed into SPY and DOW stocks instead. There doesn’t appear to be any news catalysts aside from money running away from tech, aside from Cisco Systems (key NASDAQ member) suggested tempered expectations for earnings the day before.

November: Nov 10th (-2.44%), Nov 14th (+2.35%), Nov 30th (-2.00%)

Another miserable day for tech on 11/10, as Dell warned of worse-than-expected earnings. Adding to the uncertain mood was the recount of votes underway in Florida, which would give the keys of victory to either Bush or Gore, depending on the outcome. It is interesting to note that drug stocks, which were expected to perform well under Bush, were the only ones that gained, seemingly suggesting Wall Street was already betting on winners.10/14 saw good earnings from non-tech companies and the overall market rebounded as Florida’s recount was nearly finished, seemingly finalizing the issue and cementing Bush’s victory over Gore. It can’t be stressed how contentious this election was, as one recount, exempting only one Florida county, saw Bush leading with only 327 votes, just a few days before. The issue would ultimately be settled at the Supreme Court.

11/30, compounded on the losses of the prior day, with an additional slew of missed earnings reports dragging the market down. Gateway and Altera both expected earnings declines, causing fear of a general economic slowdown being responsible for these losses. Things were now bad enough that bigger firms began to pay attention; ''The concerns about the economy have reached such a level that we are reducing equity exposure,'' said Douglas R. Cliggott, United States equity strategist at J. P. Morgan Securities.

December: Dec 5th (+3.89%), Dec 15th (-2.14%), Dec 20th (-3.13%), Dec 22nd (+2.44%)

12/05 saw one of the largest single-day rallies up to this point, triggered only by a comment by then FED chair Greenspan, suggesting market rate cuts, should the economy continue to slowdown. The previous day also saw a court ruling against Gore, almost ending the electoral deadlock and paving the way for Bush to win the election. A sharp selloff in Microsoft triggered a new low for the SPY on 12/15, after it expected to see a poor earnings turnout.

On 12/20, the NASDAQ was down 53.8% since March. It appears that the FED’s shift towards rate cuts was not happening soon enough, creating considerable distress. Other cited reasons for the collapse in prices were fears that the economy was declining much more rapidly than expected, forced sales for those buying shares with borrowed money, and end of year selling for tax deductions. Notably, Merill Lynch downgraded Cisco Systems, suggesting max pain for tech had not yet been reached. 12/22 was the Friday before Christmas and a Santa Rally seems to have come in time to keep markets from all-time lows. From what can be inferred, no other events occurred to push markets up. Earnings week, however, was just around the corner.

2001

January: Jan 2nd (-2.8%), Jan 5th (-2.63%)

The first trading day of the New Year opened dismally. Economic concerns had not changed. No particularly bad data came out, Boeing even announced it had just barely missed it’s order estimates, and dropped as a result. A pervasive feeling of dread towards an expected recession was in full swing, the slump in tech company performance now had the ability to keep down the entire economy. 1/5 crushed a rally that had occurred two days before, thanks to a surprise rate cut. However, a bad jobs report suggested the economy was worsening, and companies like Nordstrom and Next Level predicted either substantially smaller profits or bigger losses.

March: Mar 9th (-2.47%), Mar 14th (-2.59%), Mar 20th (-2.41%), Mar 27th (+2.56%), Mar 28th (-2.44%)

By March of 2001, the year had thus far been one of consistent losses. 03/09 opened sharply down after Intel had warned of worse-than-expected profits, as well as another bad jobs report. On 03/14, the DOW dipped below the critical $10,000 point. This marks a critical point, as investors now began to flee en masse into Treasury Bonds, as opposed to counting on safe “old economy” stocks. The world markets also began to suffer, as the chances of America’s economic shortcoming could now realistically affect the globe.On 3/20, the market actually got the much-desired rate cuts, but even though they scored a 50 basis point cut, the market still dropped, as investors had hoped for much more!

On 03/27 a positive consumer confidence report (which had fallen for 5 straight months prior) suggested that perhaps the economy was not so bad. A quote shared in the article captures the sentiment of the day well.''The market will use -- during a time of rebound -- any evidence it can find that things aren't going to be bad as a plus,'' said David A. Henwood, chief investment officer for Raymond James & Associates. This misplaced optimism was crushed the following day, 3/28, as renewed poor earnings reports and thousands of planned layoffs from Nortel and Palm re-confirmed that the worst had not yet passed.

April: Apr 3rd (-3.44%), Apr 5th (+4.37%), Apr 6th (-2.00%), Apr 10th (+2.71%), Apr 18th (+3.89%)

By 4/3, the broad market had returned to 1998 levels. Ariba, E.piphany, and Broadvision, all announced worse than expected earnings as well as some layoffs. Contributing to the decline were Chinese-American tensions, due to the Hainan Island incident, which saw the collision of two military aircraft and a prolonged dispute thereafter. 4/5 absolutely boomed off seemingly small news; Dell announced that its earnings would meet analyst’s lowered expectations. In a sea of bad news, it seems this is all it took for the market to greatly rise..

4/6 lost a good chunk of these gains, the following day, largely due to a modest increase in unemployment gain. Though small (only 0.1% change) the economy was getting observably worse, or so the day's sentiment suggests. 4/10 witnessed a substantial rally, partially thanks to a run on Motorola, which was due to release an earnings report the next day. It ended up missing. A short squeeze appears to have taken place here as well, helping the bullish momentum. 4/18 boomed thanks to a surprise rate cut from the FED and a better than expected earnings report from Intel. Analysts also claimed that many stocks across the board were undervalued. Concerns that the economy deteriorated so much that the FED needed to abruptly step and cut by 50 basis points, did not seem to bother most.

May: May 16th (+2.85%)

The day before 5/16 saw another rate cut, which barely moved the market but seemed to have kicked in the following day. The only other contributing factor seems to be an increase in the Consumer Price Index, which ended up being not as steep as expected. Seemingly, inflation was under control, and rate cut demands were finally being met.

July: Jul 6th (-2.35%), Jul 12th (+2.36%)

More tech earnings warnings and weak employment reports continue to plague markets on 7/6. 7/12 featured more cases of things being bad, but not as bad as expected. Microsoft predicted its earnings would moderately beat, Motorola suggested its losses would be smaller, even Yahoo posted a slight operating profit. The general market was also helped by Walmart and Sears, which expected better outcomes, suggesting the consumer was still active in the economy.

September: Sep 6th (-2.24%), Sep 17th (-4.92%), Sep 20th (-3.11%), Sep 24th (+3.90%), Sep 28th (+2.19%)

Bad economic sentiment continued unabated on 9/6, and this time a warning of worse-than-expected earnings for Intel helped bring the entire market down. The service sector also posted a grim decline, now for a second month in a row. On 9/11, the first plane to hit the Twin Towers did so almost an hour before the market opened, trading never began and the market remained closed for a few days. The first day it reopened was on 9/17. Market sentiment was already bearish before this, but huge selloffs in airline stocks, insurance stocks, and a general fear of further attacks kept the market down. Following comments from Greenspan, who suggested that further rate cuts were not on the horizon, a malaise about the economy, on top of the attacks still being in recent memory, caused a collapse in the markets. 9/24 saw a record-breaking collapse in oil prices, giving hope that sustained lower energy (which had recently become a problem) costs could prevent the continuation of a recession. 9/28 closed out the quarter strong, with most investors believing that the previous sell-offs had been an overreaction.

October: Oct 3rd (+2.00%), Oct 10th (+2.29%), Oct 29th (-2.38%)

10/3 rose thanks to an extensive tax break and government spending plan proposed by President Bush. This included anywhere from $60-$75 billion in stimulus, on top of the $40 billion in emergency spending and $15 billion in airline support that had already been approved. Tax cuts and credits for business were included as well. 10/10 saw another good day, seemingly thanks to investors being pleased with the President’s economic plans, as well as a degree of comfort with the American military’s strikes into Afghanistan. By 10/29, U.S. markers had risen over 20% in the past month, and concerns about a protracted war in Afghanistan, which could slow down economic recovery, led to a broad sell-off in the market. Boeing lost one of the largest military contracts in history and dropped around 10%, with no other good news coming out that day, the market suffered.

November: Nov 1st (+2.29%)

Stocks, primarily tech ones, rose thanks to news of a favorable settlement for Microsoft in their antitrust case. Given Microsoft’s huge position in each of the 3 indexes, the entire market followed suit on the positive news. Upbeat expectations for semiconductor companies came alongside a projected improvement in computer chip sales, despite their 44% slump from a year earlier.

December: Dec 5th (+2.23%)

In the week prior, a recession had been declared, and Enron filed for bankruptcy on 12/2. Apparently, investors were optimistic that the U.S. economy was stronger than that, and so 12/5 was a good day to be a bull. The spark for the rise was a service sector rebound, which had greatly risen in November after a significant fall in October. In addition to this, another quarter point cut was expected from the FED in the same week.

2002

January: Jan 29th (-2.87%)

After the collapse of Enron and recession news, the market strongly reacted to companies with bad balance sheets or financial reporting woes. PNC Financial and Tyco International were hit the hardest, with finance stocks in general selling off. PNC was forced to revise last year’s net income by $155 million.A good quote from that day: ''It's the cockroach theory,'' said Anthony M. Maramarco, portfolio manager at the Babson Value Fund in Cambridge, Mass. ''There's never going to be just one company that because of accounting practices or excessive debt levels will be a problem. As a result, we go out there and wholesale get rid of anything that might come close to being as tainted as what we have identified as the initial culprit.'' Global Crossing, a telecom giant, filed for bankruptcy.

February: Feb 4th (-2.48%)

As Enron’s accounting practices began to be audited by a newly formed committee, worries that other companies were fudging their numbers took center stage, with a sharp and broad sell off taking over the market. Specifically, the company had managed to conceal “very large loses” in its earnings. PNC and Tyco again sold off. Bill Gates also made a comment at the World Economic Forum that he did not expect an uptick in the economy or technology sector this year.

March: Mar 1st (+2.27%)

Both tech and manufacturing industries posted better-than-expected earnings. Consumer spending also increased by 0.4%, and Greenspan told the Senate that the economy was recovering, albeit slowly. Factory orders also saw their highest level since October 1994.

April: Apr 11th (-2.37%), Apr 16th (+2.35%)

Following 7 years of earnings beats, General Electric finally posted a profit miss on 04/11. IBM had also reported a warning about a potential earnings miss just two days before. A strange incident with IBM also occurred, as the SEC opened a preliminary inquiry into I.B.M. and promptly closed it without taking any enforcement action. On 04/16, Johnson and Johnson and General Motors posted better than expected earnings and optimism in semiconductor companies like Texas Instruments led to reignited hopes of an economic turnaround.

May: May 8th (+3.74%), May 14th (+2.11%)

Cisco Systems beat earnings on 5/8, gaining 24% in a single day and triggering a market-wide recovery. Merill Lynch was another big gainer, as reports emerged that the firm might be close to reaching a deal with the New York attorney general, concerning accusations of conflict of interest and deceptive practices among its stock analysts. 05/14 saw a better-than-expected retail sales report, bullish expectations for Intel, as well as good earnings for Walmart and J.C. Penney

June: Jun 3rd (-2.47%), Jun 17th (+2.87%)

Leading up to 6/3, the CEO of Tyco International stepped down, Microsoft admitted to inflating profits in a settlement, International tensions were also cited, probably related to India-Pakistan tension and Israel. An interesting incident that day was related to Knight Capital Group, which accidentally sold one million of its own shares, nuking its price by over 50%. On -6/17, McDonald's and Walmart claimed to expect good earnings and “bargains” were to be found despite the sell offs of the previous weeks.

July: Jul 1st(-2.14%), Jul 2nd (-2.12%), Jul 5th (+3.67%), Jul 9th (-2.48%), Jul 10th (-3.39%), Jul 18th (-2.69%), Jul 19th (-3.83%), Jul 22nd (-3.29%), Jul 23rd (-2.71%), Jul 24th (+5.73%), Jul 29th (+5.42%)

7/1’s sell-off led prices back to 9/11/1 prices. Worldcom had dropped -93% after admitting to illegal accounting practices on 06/25, reigniting Enron scares. Construction spending was announced to be down for the prior month, and rumors were circling of another terrorist attack on the Fourth of July. Corporate downgrades, news of Worldcom irregularities going back to 1999, as well as additional doom and gloom concerning attacks, led markets further down on 07/02. Despite a bad jobs report, the market rebounded on 07/05. The Fourth passed without issue and the resulting spike seems to have been helped along by significant short seller positions leading into the holiday, suggesting that many institutions were really counting on one happening. Another round of tech earnings were up around 07/0 and despite Bush’s promises for harsher corporate fraud punishments, misgivings about earnings sent the market down again.

By 07/10 these fears seem to have become stronger than ever, as the market revisited 1997 levels. The corporate corruption scandals and political instability did not let up. Once again, earnings fears were justified come 07/18, as Eli Lilly, PNC, and Automatic Data Processing all lowered profit expectations and gave bearish sentiments, sending markets even further down. 07/19 saw an even more intense breakdown in prices for the same exact reasons. When markets reopened over the weekend on 07/22, negative sentiment simply continued, despite the President’s comments suggesting it was a good time to buy. By this point, global markets began to be affected by the sell-off. The following day of 07/23 pushed markets to newer lows, following government accusations that JP Morgan and CitiGroup helped Enron perpetuate their fraud. Drops in these two companies led the largest fraction of losses in the market that day. After days of brutal lows, things turned on 07/24, with news that Congress had reached an agreement on how to punish corporate fraud, as well as the arrest of former top executives of Adelphia Communications, who had been accused of fraud. The following Monday, 07/29, investor sentiment was of the opinion that a bottom had been reached, and a few bad articles of news did not deter a huge market-wide recovery.

August: Aug 1st (-2.95%), Aug 2nd (-2.32%), Aug 5th (-3.43%), Aug 6th (+3.00%), Aug 7th (+2.00%), Aug 8th (+3.27%), Aug 13th (-2.17%), Aug 14th (+4.00%), Aug 19th (+2.36%), Aug 23th (-2.26%)

The July rally did not last long, as the Institute for Supply Management reported manufacturing was down on 08/01, Exxon Mobil reported a particularly bad earnings, and PG&E dropped 30% in one day after one of its subsidiaries was cut to junk bond status, The following day, 08/02, saw an another bad jobs growth report, coupled with a dismal outlook on Disney’s upcoming earnings report. The following Monday, 08/05, another series of bad economic data was released, made worse by Lehman Brothers' downgrading Citigroup and lowering profit expectations for JP Morgan. Institutional investors stepped in on 08/06, leading the bargain hunting for stocks. 08/07 saw buying continue, with better than expected earnings reports in companies like Watson Pharma and Eli Lilly as well as expectations of additional rate cuts at the FED’s next meeting the following week. Bulls won even harder the next day, 08/08, as news of a massive financial bailout of Brazil triggered another buying frenzy.

This rally was clipped on, 08/13, following news that the FED would not be altering rates, and troubles from the airline industries finally began rearing, with U.S. Airways filing for bankruptcy and American Airlines laying off 7,000 workers. 08/14 was a pivotal day, as the SEC had declared it the deadline for any earnings restatements, which no major companies needed to do. A dip from the prior day made buying even more attractive. 08/19 saw better than expected economic data getting released (still bad, but less bad than expected) as well as strong earnings reports from retailers like Lowe’s and Toys R Us. 08/23 saw another bad day as multiple FED chairs suggested that rates would remain unchanged in the future, Citigroup was once again implicated in fraud, this time with AT&T, AOL was down sharply after news broke of additional fraud investigations. AOL was one of the companies being investigated for cooking the books by the SEC.

September: Sep 3rd (-4.16%), Sep 12th (-2.48%), Sep 19th (-3.01%), Sep 25th (+2.49%), Sep 27th (-3.23%)

It only took a weak manufacturing and consumer confidence report to send markets back down on 09/03. 09/12 saw further signs of weak growth for the U.S. economy as well as rumors of war with Iraq. Another set of brutal losses followed on 09/19. Anxiety over an upcoming FED meeting, exceptionally bad earnings from JP Morgan, Electronic Data Systems, and Knight Ridder, on top of overall bad economic data, all compounded to push markets further down. On 09/25, General Electric met expected earnings, rekindling hope of economic recovery. 09/27 saw another series of bad economic data and disappointing earnings from Phillip Morris and a very bad one from Delta Airlines.

October: Oct 2nd (-2.36%), Oct 4th (-2.25%), Oct 9th (-2.72%), Oct 10th(+3.49%), Oct 11th (+3.91%), Oct 15th (+4.74%), Oct 16th (-2.42%), Oct 17th (+2.23%)

On 10/02, Dow Chemical and Credit Suisse issued earnings warnings, which, combined with indecisive market direction, led to a significant sell-off. On 10/04, following six weeks of consecutive losses, the Labor Department posted another set of bad job reports; Boeing, Schering-Plough, and EMC all posted either bad earnings or warnings of weaker-than-expected profits. 10/09 saw another brutal day, with General Electric and General Motors both posting poor earnings. Back then, these were considered reliable blue-chip stocks, so their failure shook many investors out. The following day, 10/10, Yahoo and Aetna gave positive outlooks, and a jobless report came out better than expected. Interestingly, terrorism concerns and a war in Iraq were cited as reasons of uncertainty for the market’s ability to maintain consistent growth. 10/11 saw global markets rebound and better-than-expected economic data. Aside from prices reaching bargain levels, there don’t seem to be any other indicators for the spike. What followed was a four day bull run, culminating on 10/15, which was the best 4 day run in 70 years up until that point. Leading the charge were significantly stronger-than-expected earnings for Citigroup and Bank of America.

The following day, on 10/16, the market reacted to poor earnings from a slew of huge companies, including Ford, Motorola, Intel, Coca-Cola, JP Morgan, Boeing, and American Airlines. Just a day after, on 10/17, markets resumed climbing thanks to good reports from IBM and Kodak and a very good report indicating housing sales had gone up substantially. Ironically enough, this closing report would inevitably lead to the next crash a few years later.

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