S&P 500 · October 9, 1979

The rules changed on a Saturday

-2.96%

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?

9 October 1979 — the S&P 500 fell 2.96% to close at 106.63
Three days earlier, on a Saturday, the Fed had made an emergency announcement: it would target the quantity of reserves supplied to banks rather than the level of interest rates
Change the method and nobody knows how high rates can go. Set the quantity instead of the price, and the market sets the price
Rates did then climb to levels nobody had seen
For equities that is two bad things at once — the discount rate rises and the economy turns down
The market had been sliding since Monday and this was the third session. From the early-October high to the early-November low the fall was 10.25%
The policy broke inflation over several years, and two recessions happened on the way

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.