Nasdaq · January 3, 2001
The Fed's surprise cut
+14.17%
single-day change vs previous close
Part of a longer stretch
Nine months down without a rest
midway through · 2000-07-17 → 2001-04-04, -61.66% over the whole period
What happened that day?
- On 3 January 2001 the Nasdaq rose 14.17% in a single day
- It was nine months into the dot-com bust and the index was already far below its peak
- The Fed cut rates on a day with no scheduled meeting. An unscheduled cut also signals that things are urgent, but the market read it as rescue
- Lower rates ease the funding burden on companies growing while losing money, which is why the Nasdaq reacted hardest
- The bounce did not last. The Nasdaq kept sliding until October 2002
- It is a good illustration that rate cuts do not always stop a fall — they work poorly on a bubble that has already begun to deflate
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.