S&P 500 · November 1, 1978

The day Washington moved to defend the dollar

+3.97%

single-day change vs previous close

Part of a longer stretch

Six years back from the oil shock

near the end of it · 1974-10-03 → 1980-07-17, +94.99% over the whole period

What happened that day?

The S&P 500 rose 3.97% to close at 96.85
The American government and central bank put out a package to hold the dollar up, all at once
The core of it was rates. The central bank raised the discount rate by a full percentage point — the largest such move in decades at the time
Alongside it came Treasury debt issued in foreign currencies, used to buy dollars back
The dollar had been weakening all year, and the view had spread that there was no reason to hold a currency on its way down
Higher rates are normally bad for shares. Not this day. A dollar in free fall looked like the worse outcome
The episode passed its low two weeks later

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 put together from the public record; where a specific source was consulted it is listed above.