Nasdaq · May 10, 2000
After the Fed raised half a point
-5.59%
single-day change vs previous close
Part of a longer stretch
The eleven weeks when the bubble first broke
near the end of it · 2000-03-10 → 2000-05-23, -37.32% over the whole period
What happened that day?
- The Nasdaq fell 5.59% on the day
- Six days later, on 16 May, the Fed raised rates by half a point at once — the sixth rise of that cycle and the largest. The market was reacting to it in advance
- What the Fed meant to cool was inflation; what actually cooled was shares. Assets whose prices have run ahead react to rates first
- For a company with no profit, rates hurt twice. It must borrow now and borrowing costs more, while the present value of its future profit is marked down at the same time
- This proved to be the last rise of the cycle, though the market did not know it
- The index fell for two more weeks and bottomed for this phase on 23 May
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.