Nasdaq · July 1, 2002

After the telecom fraud came out

-4.06%

single-day change vs previous close

Part of a longer stretch

Nine months when the books could not be trusted

midway through · 2002-01-04 → 2002-10-09, -45.90% over the whole period

What happened that day?

The Nasdaq fell 4.06% on the day
The week before, a large US telecom was found to have inflated profits by booking costs as assets
The scale was large. Billions of dollars had been overstated, and the company went bankrupt the following year in the largest such filing in US history at the time
This is the moment it was confirmed that the energy company had not been an isolated case. The suspicion spread to the whole market from here
If reported profit cannot be believed, no share can be priced. That is why companies with sound results fell alongside the rest
The bottom of this phase came three months later, on 9 October

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.