Stock Market Crash - Deepstash
Stock Market Crash

Stock Market Crash

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Stock Market Crash

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Understanding market crashes

A stock market crash refers to a drastic, often unforeseen, drop in the stock market over a single or several days.

The sudden drop in stock prices may be influenced by economic conditions, catastrophic events, or speculative elements.

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Famous stock market crashes in the US

  • The Great Depression Crash of October 1929. Speculations in commodities such as autos and homes caused share prices to skyrocket, driving up prices in a panic buying mode, but many went into bankruptcy when the market bubble popped.
  • The Black Monday Crash of October 1987 is attributed to computer trading, derivative securities, over-evaluation, illiquidity, and trade and budget deficit.
  • Technology stocks triggered the Dot-com Crash of 2000-2001.
  • The Stock Market Crash of 2007/08  was triggered by the collapse of mortgage-backed securities in the housing sector.
  • The COVID Crash of March 2020.

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Circuit Breaker: Level 1 and 2 market-wide circuit breakers suspend trading for 15-minutes and a level 3 halts trading for the rest of the day. This can happen when the S&P 500 falls more than 7% at any time before 3:45 p.m. EST.

Plunge protection: Turbulent markets can also be dampened by the purchase of huge quantities of stocks by large entities when prices drop. Big entities hold prices up to prevent individual traders from panic trading.

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