Nasdaq · October 1, 1998
Unease right after the hedge fund rescue
-4.81%
single-day change vs previous close
Part of a longer stretch
The Russia shock on the Nasdaq
near the end of it · 1998-07-20 → 1998-10-08, -29.55% over the whole period
What happened that day?
- The Nasdaq fell 4.81% on the day
- Days earlier a large hedge fund had been wound down only through funding from the banks. It had been running borrowed money at dozens of times its capital
- The market stayed uneasy despite the rescue, because there might be more structures like it
- The problem here was not the size of the losses but that nobody knew how entangled everyone was
- The gap between corporate and government bond yields had widened sharply. Nobody would lend anywhere risky
- 8 October, eight sessions later, was the bottom, and a further Fed cut turned the tide
Sources
Every figure on this page is recomputed from the original daily closing prices and checked against them at build time. The account of what happened is written from the sources listed above.