We usually talk about stock market performance on a yearly basis. And last year’s -18% S&P 500 loss was nothing to write home about. But during bad years daily volatility can also spike. In 2022 the index’s worst day was September 13^th when it fell -4.3%. How does that one-day loss stack up against the worst days the stock market has seen in the past? It’s not even close.

On October 19, 1987 the S&P 500 plunged by over -20%. That date, the biggest one-day decline in the market’s history, became known as Black Monday 1987. While it’s generally difficult to attribute daily market movements to any particular factor, that crash remains exceptionally mysterious. Some point to the rise of stock options and derivatives as the source of the problem. Others suggest it was caused by foreign investors driving prices up too rapidly. Whatever the cause, the event led to the creation of a circuit-breaker market reform that pauses trading during rapid selloffs.

The second worst day in history for market declines was October 28, 1929, when the S&P 500 dropped -12.3%. The following day (Black Tuesday) was number four, with the index shedding another -10.2%. The stock market gave up nearly $30 billion in value over those two days. By mid-November the DJIA had lost almost half its value, and by mid-1932 it had declined by nearly -90%. It would take another 22 years for it to catch up to its previous high. No wonder everyone refers to this period as the Great Depression.

The third biggest drop (-12%) occurred on March 16, 2020 shortly after its sixth biggest decline (-9.5%) on March 12. The cause was the advent of the COVID-19 pandemic, which led to the shutdown of large swaths of the economy and ushered in a period of high market volatility. The circuit breakers created after the 1987 decline halted trading four times that month. But unlike the crash of 1929, the market fully recovered after only a couple of months.

On Nov. 6, 1929, just a week after Black Tuesday and a surprising market rally, the DJIA experienced the market’s fifth biggest drop, another -9.9%.

The seventh biggest decline occurred during the 1937 recession on Oct. 18 (-9.2%). That period represented the third largest economic downturn of the 20^th century (from May 1937 until June 1938), when unemployment reached 20% and real GDP fell almost -10%.

Numbers eight and nine occurred during the so-called Great Recession of 2008. On October 15^th the S&P 500 fell -9% and another -8.9% on December 1^st. From its peak in October 2007 to its trough in March 2009 the large cap index lost -57%. (The speed of the collapse began to accelerate on September 29^th when Congress rejected a $700 billion bank bailout.)

The tenth largest one-day decline occurred on July 20, 1933 (just under -8.9%) in the midst of President Roosevelt’s aggressive actions to mitigate the depression after taking office.

Most people will probably look back on 2022 as one of the worst years ever for their investment portfolio. But in the context of daily volatility, last year was relatively benign.

(Source: Wikipedia).