Nasdaq · September 1, 1998
Expecting the Fed to step in
+5.06%
single-day change vs previous close
Part of a longer stretch
The Russia shock on the Nasdaq
midway through · 1998-07-20 → 1998-10-08, -29.55% over the whole period
What happened that day?
- The Nasdaq rose 5.06% on the day
- In late August the Fed chair had said the US could not stay insulated from the world economy, read as a signal that rates could come down
- Until then the Fed had held rates out of concern for inflation. The remark meant attention had moved from prices to financial stability
- The market had fallen hard over the preceding days on the Russian default, so the bounce was large
- The Fed did cut three times that autumn
- The response averted the crisis but left an expectation behind. The calculation that a central bank will catch you inflated the bubble of the following two years
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.