8 September 1998: The Dow posts a record 380-point gain
The Dow surged about 380 points, then the largest point gain in its history, after Fed chair Alan Greenspan hinted days earlier that interest rate cuts were possible amid the global turmoil. Russia's default and fears about hedge funds had battered stocks for weeks. The rebound showed how quickly sentiment can swing when the central bank signals support. The Fed did cut rates three times that autumn.
The lesson: Central bank signals can rapidly shift market sentiment, for better or worse, in a single session.
What it meant for investors
$1,000 in S&P 500 index fund at the start of 2000 → $4,626 today, vs $4,626 in the S&P 500.
We start the clock at the start of 2000, the first year in our price data after the event. That is 4.6 times the money, but $0 less than a plain index fund made over the same years.
What S&P 500 index fund teaches: Owning the whole market removes the risk of picking the wrong company but not the risk of a lost decade, so time horizon matters as much as diversification.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2000 | $1,470 | $4,626 | $4,626 |
| 2003 | $880 | $7,727 | $7,727 |
| 2005 | $1,180 | $5,763 | $5,763 |
green = beat the S&P 500 · red = lost money
What if you bought S&P 500 index fund? Every starting year and the full story →
More S&P 500 index fund history
- 5 February 2018: Volmageddon: the Dow drops 1,175 points
- 19 February 2020: The S&P 500 hits a record before COVID
- 29 February 2020: The US reports its first COVID-19 death
- 3 March 2020: The Fed makes an emergency rate cut
- 6 March 2009: The S&P 500 touches 666
- 9 March 2009: The bear market bottoms
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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