S&P 500 · August 12, 1982
The Volcker rate shock
-27.11%
peak-to-trough, the whole slide
430 trading days · 1980-11-28 → 1982-08-12
back to the old high on 1982-11-03
What happened that day?
- From the November 1980 peak to the August 1982 low the S&P 500 fell 27.11% — 430 trading days
- Inflation had run loose through the whole of the 1970s. Two oil shocks had baked it in
- Paul Volcker took over the Fed in 1979 and pushed the policy rate to unprecedented levels to break it
- At that level borrowing to run a business stops working. Corporate investment and home buying froze and the economy fell into a deep recession
- Unemployment climbed into double digits and Volcker was attacked from every direction, but he held the rate there
- Once inflation clearly broke he began cutting in August 1982, and stocks turned with it. The old high was back on 3 November 1982
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.