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Will we encounter a new US Stock market crash?


Over the years, we did have many different stock market crashes. Some of them were minimal, others disrupted the economy quite a bit. Such a crash occurs when there’s a massive decline in stock prices. As a rule of thumb, a stock market crash appears when the stock market indexes are losing at least 10% of their value in a short amount of time. These US Stock market crashes happen without any warning, and it follows situations when the prices were on the rise for quite some time.

Which are the biggest US Stock market crashes in history?

The worst US Stock market crash happened in 1929, and it was the main catalyst for the Great Depression. At that time, the Dow Jones industrial average was on the rise for the past 8 years. However, in September of that year, it started to get lower and lower, and in less than 2 months it had a 13% decline. Then it also had another 12% of decline. In the middle of November, the Dow lost half its value.

Another US Stock market crash is the black Monday crash in 1987. During that time, the Dow Jones industrial average was down 22% and most of the major stocks indexes were down either 20% or more. The Dot.com bubble of 1999-2000 also had a similar effect. The NASDAQ had a peak of 5000+ points and then the index would plummet starting with 2000 and up to 2002, with around 76.81% to reach a low of 1139 points.

We also had the financial crisis of 2008, starting with September that year, the stock market indexes started to lose around 20% of their value. The Dow was also down around 54% in March 2009, so this took quite a bit of time to recover from.

Are we on the verge of a new US Stock market crash?

The most recent US Stock market crash is the one we experienced in 2020 due to the Coronavirus pandemic. In late February 2020, the Down Jones and also S&P 500 were 11% and 12% lower. The difference here is that the crash was not as bad, and the stock market did get back on track in May 2020, mostly thanks to a large amount of stimulus money from the Federal Reserve.

But will the US Stock market crash again? That’s hard to say, however we can look at some specifics and estimate whether a new crash will arrive in the near future. What can lead to a new crash would be things like geopolitical events, oil shocks, economic lockdowns, a change in policies, a slowdown in the Chinese economy, a rise in inflation and also big tech regulations.

All of these factors, combined with new Coronavirus variants that slow down the economy can bring a new potential crash. For the time being, the market is doing well, but there’s always the potential to deal with various challenges and a market crash. All the upcoming policies and regulations that come as a result of the pandemic and new, unforeseen situations have the potential to lead to a new US Stock market crash, so we need to be ready!