As 2025 begins with a shaky start for the stock market, American investors are starting to worry. The recent dip mainly happened after President Donald Trump supported global tariffs. At the same time, the economy has shown signs of slowing down.
Although markets often rise and fall, crashes are different. They cause steep drops across large parts of the market in just days. Moreover, experts find it nearly impossible to predict such crashes in advance.
Historically, the US has faced many dramatic crashes—from the Great Depression to the COVID-19 shock. Generally, a crash happens when stock prices drop by 20% or more within a short time.
Let’s look at five of the worst crashes in American history.
1. 1929 Crash – Trigger for the Great Depression
The stock market crash of 1929 remains the most devastating in US history. It followed the roaring success of the 1920s, a time when the economy boomed and stock prices soared. However, things changed drastically when markets suddenly collapsed.
Experts blame excessive borrowing, or leverage, for this crisis. Investors had poured in money they didn’t really own. When the bubble burst, it helped trigger the Great Depression, leading to mass unemployment and years of economic struggle.
2. Black Monday – October 19, 1987
On this day, the US market experienced its biggest single-day percentage loss. The Dow Jones Industrial Average plunged by 22.6%, or 508 points. Analysts mainly blamed computerized trading systems for the crash. These programs triggered massive sell-offs, creating panic. Still, the market managed to recover fully in less than two years.
3. Dot-Com Crash – 2000 to 2002
During the late 1990s, internet companies became the centre of a stock market boom. The NASDAQ index, filled with tech stocks, jumped from 1,000 in 1995 to over 5,000 by 2000. But the bubble didn’t last.
On March 10, 2000, the NASDAQ hit a peak of 5,048.62. Then it began to fall rapidly. By October 4, 2002, it dropped by almost 77% to 1,139.90. The crash exposed how overvalued many internet companies were. The NASDAQ didn’t recover to its earlier peak until nearly 15 years later.
4. 2008 Financial Crisis – Collapse of Subprime Mortgages
This crisis took shape after banks started giving risky home loans to people with poor credit scores. In 1999, Fannie Mae made mortgages easier to get. Many people borrowed more than they could afford.
At the same time, financial firms used cheap debt to boost their investment returns. As more people bought homes, prices soared. However, trouble started in March 2007 when Bear Stearns couldn’t handle its mortgage-related losses.
By September 2008, the major US indexes had fallen by almost 20%. On March 6, 2009, the Dow reached its lowest point—54% below its previous peak. It took four years for the market to bounce back fully.
5. COVID-19 Crash – February to March 2020
The global pandemic caused the most recent stock market crash. During the week of February 24, 2020, the Dow and S&P 500 dropped by 11% and 12%. These were the worst weekly losses since 2008.
On March 12, the Dow fell by 9.99%. Just a few days later, on March 16, it dropped another 12.9%. These were some of the biggest one-day losses ever.
However, this crash didn’t last long. The market recovered by May 2020. The quick rebound happened because of aggressive action. The Federal Reserve slashed interest rates and injected $1.5 trillion into the markets. Meanwhile, Congress passed a $2.2 trillion relief package to support the economy.