Stock market downturn of 2002

The Stock Market Downturn of 2002 (some say "stock market crash") is the sharp drop in stock prices during 2002 in stock exchanges across the United States and Europe. After recovering from lows reached following the September 11, 2001 Terrorist Attack, indices slid steadily starting in March 2002, with dramatic declines in July leading to lows last reached in 1997 and 1998. The dollar declined steadily against the euro, reaching a 1-to-1 valuation not seen since the euro's introduction.

This downturn can be viewed as part of a larger bear market or correction, after a decade-long bull market had led to unusually high stock valuations. An outbreak of accounting scandals was a contributing factor to the speed of the fall, as numerous large corporations were forced to restate earnings and investor confidence suffered.

The International Monetary Fund has expressed concern about instability in United States stock markets.

From 1987 to 1995, the Dow Jones Industrials rose each year by about 10%. From 1995 to 2000, the Dow rose 15% a year. A bear market began in 2000; by July/August 2002, the Dow dropped to the same level it would have been if the 10% annual growth rate it followed during 1987-1995 had continued up to 2002.

After falling for 11 days and reaching a low below 8000 on July 23, 2002, the market rallied, rising 15% over the next four trading days rising to over 9000 during August, but beset by war jitters and dismal earning reports from key technological sector stocks, closed below 8000 on Septempber 19, 2002.

Indices fell sharply again on August 2 and 3. On August 5, stocks continued their decline, NASDAQ breaking the July 23 low. The markets rose sharply over the rest of the week.

See economy of the United States, timeline of U.S. economic indicators for related information.

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