The U.S. Stock Market Experienced A Historic Decline Last Week
April 4, 2025 marked only the 17th time in the past 100 years that the DOW dropped by at least 9% over a two-day span
In the early evening of April 2, the U.S. announced the details of the highly anticipated tariffs on global trading partners. On April 3, the DOW Jones Industrial Average, which is a stock market index of 30 publicly-traded U.S. companies, decreased to a closing value of 40,546, compared to 42,225 the day prior. The DOW eroded further on Friday, April 4, falling to 38,315 by the end of the trading day, which translated to a 9.3% decline in value over two days.
To provide context for that kind of percent change in such a short period of time, I thought it would be helpful to compare to other times in history (past 100 years) when the DOW dropped by at least 9% over two trading days (note: while the S&P 500 and NASDAQ are two other popular stock market indices, I could only easily locate free and available historical data of the DOW for the purposes of this analysis). As shown below, it’s extremely rare for the DOW to decrease by 9% or greater over a two-day span, having happened only 17 times since 1925. Nine of those instances are tied to the Great Depression and took place between 1929 and 1933. Another notable decline happened in 1940, immediately following Germany’s invasion of France during World War II. Since then, the only other occurrences (prior to last week) have been during the Black Monday market crash of 1987, in late 2008 as the global financial crises deepened, and at the onset of the world’s economy shutting down in March 2020 due to the COVID-19 pandemic. It goes without saying that’s not an enviable list to be included in.
If the DOW were to fall by over 1,900 points tomorrow (Monday, April 7), then that would establish one of the ten fastest declines over a three-day period for the index. As of publication of this article, DOW futures are down over 1,000 points, but that can certainly change (in either direction) once the market opens in the morning.
For those interested in a comprehensive overview of the potential economic impacts of the tariffs, I highly recommend checking out this research by Budget Lab at Yale. Within the key takeaways of their analysis is a crucial statement which can help explain (in part) the negative market reaction to the tariffs announcement and details: “When including all tariffs implemented this year so far, the US average effective tariff rate is now at 22½%, the highest since 1909.” Along with the aforementioned 9.3% decline in the DOW from Wednesday to Friday last week, the S&P 500 decreased 10.5% and the NASDAQ by over 11% over that same period.