Black Thursday took place on October 24, 1929, the first day of the Stock Market Crash of 1929 and the worst stock market crash in U.S. history. At its opening, the market fell 11%. A record low of 12.9 shares was traded by the time the day ended.
Black Thursday also marked the beginning of the end of a decade-long bull market and the onset of the Great Depression, which lasted from 1929 to 1939.
Companies should do everything they can to be prepared for the ebbs and flows of the stock market, including taking advantage of brokerage trading platforms. These tools can analyze financial market transactions and activities and evaluate potential risks associated with trading opportunities.
Brokerage trading platforms also come in handy by facilitating investors and traders opening, closing, and managing market positions.
In the 1920s, wealth and excess were common themes. Throughout the decade, the U.S. stock market underwent rapid expansion and peaked in August 1929 at the height of the Roaring Twenties.
However, by the fall of 1929, various events, including significant speculation and the exit of foreign investors, led to price declines that caused investors to lose confidence and start panic selling. Rising unemployment coupled with a decrease in production left stocks overvalued.
Additional causes that led to Black Thursday and the Stock Market Crash of 1929 include low employee wages, staggering debt, an agricultural recession, and an excess of bank loans that borrowers couldn’t repay. More specifically, many farmers accrued debt during and after World War I, as prices of necessary agricultural goods increased. Farm commodities also decreased, making it challenging for farmers to repay their loans.
Banks and financiers attempted to prop up the stock market on Black Thursday. However, this only acted as a bandaid, rather than a solution to the situation. By the end of trading on October 28 (known as Black Monday), the Dow fell nearly 13%, which triggered an all-out panic the following day.
Despite the adverse events surrounding Black Thursday (such as widespread bank failures that became a catalyst for the Great Depression), one positive change that came as a result of the Stock Market Crash of 1929 is that it led to a complete overhaul of the U.S. Securities industry.
The Securities Act of 1933 was made law to protect investors and create transparency in the financial statements of corporations.
In 1934, Congress created the Securities and Exchange Commission (SEC), the first federal securities market regulator. Two of the SEC’s primary roles include protecting investors and maintaining fair and orderly functioning markets.
Black Thursday is the first day of the Stock Market Crash of 1929. To help offset the falling market and heavy trading volume, Morgan Bank, Chase National Bank, and National City Bank of New York and investment companies worked together to fund $750 million worth of stocks in an effort to restore confidence in the markets.
However, this was only a temporary solution as the Dow fell 13%, triggering panic and Black Tuesday a few days later.
The stock market crash that began on Black Thursday ended on Black Tuesday, October 29, 1929. It also marked the beginning of the Great Depression, which lasted until the beginning of World War II. Unlike Black Thursday, where banks stepped in to buy stocks and do damage control, no one stepped in to help.
Therefore, Black Tuesday ended with more severe losses than Black Thursday. After all was said and done, the Dow Jones Industrial Average (DJIA) fell 12% on Black Tuesday, making it one of the most significant one-day drops in stock market history. Billions of dollars were lost, wiping out thousands of investors.