By the end of the day on Monday, the Dow had lost more than 1,100 points since the markets had opened that morning—its largest one-day drop ever. The day’s losses totalled up to around 4.6 percent percent of the index’s value, which is not insignificant, but also not unheard of: A drop of more than 3 percent followed Brexit back in 2016. And Monday’s losses weren’t on anywhere near the scale of Black Monday, a day in 1987 that earned its name from the erasure of more than 20 percent of the Dow’s value.
Watching the market tank, however precipitously, is always scary. That’s probably why several brokerage sites, such as Fidelity and Vanguard, crashed on Tuesday, as frantic investors clamored to check their portfolios. But even as the Dow slid in historic fashion, many analysts still weren’t panicking. Why? They’ve been expecting this type of adjustment for years.
For a moment on Tuesday morning, the stock market was on the way up. Then it plunged again, and continued to zig and zag as the day progressed. The Dow’s roller-coaster-like performance may seem unusual and dramatic, but it’s actually just a somewhat abrupt restoration of a fairly normal feature of markets: volatility.
The stock market has been on a historic bull run, hitting several new highs with mostly uninterrupted growth. This impressive streak has allowed the Dow to nearly quadruple since 2009. That’s why the impact of Monday’s enormous slide has been nowhere near as big as that of the crash in 1987, even though the recent drop-off seems large.