778 Point Drop Anniversary

A year ago today on Sept. 29, the Dow Jones industrial average suffered its worst point drop in history, plummeting nearly 778 points, after the House of Representatives rejected the first draft of the $700 billion financial rescue plan. The S&P 500 and Nasdaq each plunged about 9% that day.

Of course, the controversial Troubled Asset Relief Program, or TARP, ultimately wound up passing the House a few days later after the Senate approved a modified bill. Some politicians who initially voted against the bailout even attributed fears of another big sell-off as a reason for changing their minds.

Looking back, it truly is amazing how jittery and uncertain investors were about where the economy was heading. Between the time that Lehman Brothers collapsed on Sept. 15 and the end of 2008, the S&P 500 moved up or down at least 3% in one day a stunning 29 times.

Fortunately, the days of insane market volatility appear to be over. Even Monday’s triple-digit point rally in the Dow was relatively tame. The Dow gained only 1.3% while the S&P 500 was up 1.8%. The S&P 500 has experienced a 3% swing only 20 times so far this year. And that could be a sign that the recent rally, despite some concerns about running too far too fast, could be for real.