Stock market crashes: what a crash is and a history of the major US crashes

Education only, not financial advice. Figures come from official sources, each with its date; past market moves do not predict future ones. How we work

A stock market crash is a sudden, steep fall in share prices across a whole market, usually measured on an index such as the Dow Jones Industrial Average, the S&P 500 or the Nasdaq Composite. The worst in US history took the Dow down 89% between September 3, 1929 and July 8, 1932, and the worst single day was October 19, 1987, when the Dow fell 22.6%.

This guide explains what the word means, lists the major US crashes with their dates and depths from official sources, and describes what usually happens around them. Each crash has its own case file, linked below.

What is a stock market crash?

There is no official definition. FINRA's investor glossary of stressed-market terms, for example, defines corrections, bear markets and circuit breakers but gives no threshold for a crash. The word is used by historians, journalists and investors for declines that are both large and fast, where prices drop by double digits within days or weeks rather than drifting lower over years.

Regulators do define two related terms. FINRA, the US broker-dealer regulator, describes a market correction as a fall of at least 10% before the previous trend resumes. It says a decline of 20% or more in a broad market index generally meets the threshold of a bear market. Most crashes end up as bear markets, because they cross 20%. Many bear markets are not called crashes, because they unfold slowly. The 2022 decline in the S&P 500, a fall of 25.4% spread over more than nine months, is usually described as a bear market.

The one place where US rules put numbers on a fast fall is the market-wide circuit breaker. Trading on all US stock exchanges pauses when the S&P 500 drops 7% or 13% from the previous day's close, and stops for the day at 20%. Those levels are the closest thing to an official line for a one-day crash.

When did the stock market crash? The major US crashes

The table measures each crash from the index's closing high to its closing low, and then to the first close above the old high. Where the Dow or the S&P 500 is not given, it is because we could not confirm the exact closing levels in an official source; the Nasdaq Composite, whose full history is published by the St. Louis Fed, is used instead.

Sources: Federal Reserve History (1929); FRED series NASDAQCOM and SP500 (closing values, computed by us on October 6, 2026).

A few figures sit outside the table because they measure something different. On October 19, 1987 the Dow fell 508 points, or 22.6%, in one session, the largest one-day percentage fall in its history according to the Federal Reserve History essay. For 2007-2009, the Federal Reserve History essay on the Great Recession states that the S&P 500 fell 57% from its October 2007 peak to its March 2009 trough. And on May 6, 2010, the flash crash sent the E-Mini S&P 500 futures contract down more than 5% in about four and a half minutes before most prices recovered within the same afternoon. That event lasted too briefly to fit a peak-to-trough table.

Crashes are older than the stock indexes. The Dutch tulip mania of 1636-1637 is the best-known early speculative collapse, though historians now question how much damage it did.

What do the big crashes have in common?

Read side by side, the case files show a few repeated features. None of them is present every time.

A long rise first

Most crashes followed years of rising prices. The Dow rose six-fold between 1921 and 1929. In 1987 it had gained 44% in the seven months to late August. The Nasdaq Composite more than doubled between January 1999 and March 2000, from 2,208.05 (first close of 1999) to 5,048.62, before the dot-com bubble burst. The 2020 crash was the exception: it started from a record high, but the trigger came from outside the financial system.

Borrowed money

Leverage turns a fall into a rout. In 1929 buyers on margin put down a fraction of the price and borrowed the rest, so falling prices forced sales. In 2007-2008 heavy borrowing by banks and households left them exposed when house prices fell, as our 2008 case file sets out. Selling by people who must sell is what makes a decline fast.

Trading mechanics

Some crashes were made worse by how trading worked. In 1987 portfolio insurance strategies sold futures automatically as prices fell, and the stock, options and futures markets cleared trades on different timelines. In 2010 an automated sell program and the withdrawal of buyers drained liquidity in minutes.

A link to the wider economy, or not

Crashes and recessions are related but separate. The National Bureau of Economic Research dates a business cycle peak to August 1929, before the crash. It records no recession around 1987: the expansion ran from November 1982 to July 1990. The 2001 recession ran from March to November, in the middle of the dot-com fall. The Great Recession ran from December 2007 to June 2009, and the 2020 recession lasted two months, February to April. Our pages on what a recession is and recession vs depression explain the difference.

What happens during a crash?

Trading can be halted

Circuit breakers were created after the 1987 crash. The current market-wide rules, approved by the SEC on May 31, 2012, use the S&P 500 as the reference. A fall of 7% (Level 1) or 13% (Level 2) before 3:25 p.m. halts trading for 15 minutes; a fall of 20% (Level 3) halts it for the rest of the day. They replaced older thresholds of 10%, 20% and 30% based on the Dow. The 2012 approval also brought in limit up-limit down, which stops individual stocks from trading outside set price bands. How the halts worked in March 2020 is described in our 2020 case file.

Central banks supply cash

The Federal Reserve's response has followed a recognizable pattern since 1987: promise liquidity, lower short-term rates and keep banks lending. On October 20, 1987 the Fed said it stood ready "to serve as a source of liquidity to support the economic and financial system." During the 2007-2009 crisis it cut the federal funds rate from 5.25% in September 2007 to a range of 0 to 0.25% in December 2008, and announced large-scale asset purchases in November 2008 and March 2009. In 2020 it moved faster still, as the 2020 case file shows. In October 1929 the New York Fed bought government securities and sped up lending through its discount window, which the Federal Reserve History essay says helped contain the immediate crisis.

Governments and regulators change the rules

Big crashes usually leave new rules behind. After 1987 the exchanges developed circuit breakers and unified the clearing of trades across stock, options and futures markets. After the 2010 flash crash, single-stock pauses and then limit up-limit down followed. The federal securities laws of the 1930s and the reforms after 2008 are covered in the 1929 and 2008 case files.

Why are crashes so hard to predict?

The record gives three reasons. The triggers have little in common: a credit squeeze in 1929, a sudden wave of program selling in 1987, overvalued technology shares in 2000, mortgage losses in 2007-2008, an algorithmic sell order in 2010 and a pandemic shutdown in 2020. Warning signs that appear before one crash are often absent before the next. A risk can be widely discussed for years and still give no clue about the day the selling starts.

The economy is a poor guide too. A recession had begun before 1929, none followed 1987, and in 2020 the crash and the recession arrived together. Indicators such as the inverted yield curve are watched as recession signals, yet after the 2022-24 inversion, the longest unbroken run in the series, the deepest S&P 500 fall in the FRED data up to October 5, 2026 was 18.9%, between February 19 and April 8, 2025.

Recovery is just as uneven. The S&P 500 regained its 2020 high in six months. The Nasdaq needed fifteen years after 2000. Index levels also leave out dividends and inflation, so the real experience of an investor could be better or worse than the headline number.

We do not forecast markets, and this page is not investment advice. If a crash has you asking what to do with your own savings, the answer depends on your circumstances, debts and time horizon. The SEC's Investor.gov site is a neutral place to start in the US, and MoneyHelper covers the same ground in the UK.

Where to read about each crash

• Tulip mania, 1637: the early speculative bubble and what historians now say about it.
• The stock market crash of 1929: Black Thursday, Black Tuesday and the fall to 1932, which led into the Great Depression.
• Black Monday 1987: the largest one-day percentage fall in the Dow.
• The dot-com bubble: the Nasdaq's 77.9% fall from 2000 to 2002.
• The 2008 financial crisis: subprime mortgages, Lehman Brothers and the Great Recession.
• The 2010 flash crash: a few minutes on May 6, 2010.
• The COVID stock market crash of 2020: a 33.9% fall in 33 calendar days, and a recovery within six months.

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