S&P 500 · August 31, 1998
Russia's default and LTCM
-19.34%
peak-to-trough, the whole slide
31 trading days · 1998-07-17 → 1998-08-31
back to the old high on 1998-11-23
What happened that day?
- From the 17 July 1998 peak to the 31 August low the S&P 500 fell 19.34% — 31 trading days
- In August Russia said it could not pay its government debt. Sovereign defaults are rare, and the shock was large
- The big loser was Long-Term Capital Management, a hedge fund famous for the Nobel laureates who built it
- LTCM was investing with tens of times its own capital borrowed. If it went under, the banks that had lent to it were next in line
- The Fed convened the major banks to take LTCM over and wind it down, then cut rates three times. That settled it
- The old high returned on 23 November — three months
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.