By SIMON CONSTABLE
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- Wall Street photo courtesy of Carlos Delgado,
- CC BY-SA 3.0, via Wikimedia Commons
By SIMON CONSTABLE
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It was a long time coming, but 25 years ago this month the “New Economy” joined the Dow Jones Industrial Average. The change, as of trading on Nov. 1, 1999, came in the form of adding chip maker Intel, and SBC Communications, which cemented the role of both technology and communications sector in the index. Home Depot, was also added to the Dow that day.
As those stocks joined, out went old-economy stalwarts: Chevron, Goodyear Tire and Rubber, Sears Roebuck and Union Carbide. The changes were also notable because it was the first time that stocks from Nasdaq (Intel and Microsoft) had joined the Dow. Until then, all 30 Dow industrials had been listed on the NYSE.
“If that change didn’t happen, there would have been a big discrepancy between that index and it would have been a big oversight,” says Susannah Streeter, head of money and markets at Hargreaves Lansdown. The index is designed to reflect the major sectors of the U.S. economy. Read more here.
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By SIMON CONSTABLE
By SIMON CONSTABLE
In 1929, Wall Street’s good times ended almost overnight as stocks began a
multiyear skid. The key day, Oct. 28, 1929, also known as Black Monday (a
moniker which then resurfaced to describe the crash of 1987), was the beginning
of a crash in which the Dow Jones Industrial Average fell 13% and 12% on back-to-
back days. The slide ended in July 1932 when the Dow had lost 89.2% of its value.
“People remember the crash of ’29 because they blame it for triggering the Great
Depression,” says Sam Stovall, chief investment strategist at financial analytics
company CFRA. That depression led to years of economic contraction, ultrahigh
unemployment and mass discontent. The Dow returned to its previous high in
late 1954.
Stovall says there were several reasons for the 1929 crash. First, in the 1920s
investors embraced buying shares with borrowed money, often as much as 90%
of the stock’s value. That was fine while the market rallied. But on Black Monday
that ended as investors dumped their holdings to pay back the debt. “Basically, a cascading effect emerged,” he says. Read more here.