How Does Monday’s Stock Plunge Stack Up?

There have been far blacker Mondays.

The Dow Jones industrial average plunged 1,175.21 points, or 4.6 percent, to 24,345.75 on Monday, while the Standard & Poor’s tumbled 113.19 points, or 4.1 percent, to 2,648.94.

Measured by points, those are steep drops — the biggest on record for the indexes. The previous largest point declines for each benchmark came in 2008, at the height of the financial crisis.

But Monday’s plunge was far less impressive on a percentage basis. The Dow’s fall ranked as its 100th biggest, while the S. & P. 500’s slide was the 127th biggest in the index’s history, according to S & P Dow Jones Indices.

Here is how Monday’s sell-off stacks up against two other major tumbles.

• Dow: Down 777.78 points, or 6.98 percent

• S. & P. 500: Down 106.85 points, or 8.81 percent

Just weeks after Lehman Brothers failed in September 2008, lawmakers in the House defied President George W. Bush and rejected a $700 billion economic rescue plan. The vote sent markets tumbling to what was the biggest point loss in either index’s history.

But points are not the best way to compare the magnitude of a stock index’s declines across eras. As the stock market has risen, big point moves have translated into increasingly smaller percentage changes. The Dow and the S. & P. 500 have more than doubled from their closes on Sept. 29, 2008.

• Dow: Down 507.99, or 22.61 percent

• S. & P. 500: Down 57.86, or 20.47 percent

“Black Monday” was a petrifying moment — an even bigger decline in both points and percentage than the stock market crash of 1929. But unlike the 1929 crash, the slide in 1987 did not contribute to a wider economic slump. The stock market recovered its losses by early 1989.

But the plunge did prompt regulators to introduce special brakes that kick in when the market falls too far, too fast. Stock markets, though, remain vulnerable to the sort of confusion and fear that one prominent economist said last year was a potent force in 1987.

Content originally published on https://www.nytimes.com/2018/02/05/business/dealbook/stock-markets-dow-equities.html by STEPHEN GROCER and PETER EAVIS