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  • Writer's pictureJacob Vernon

A Brief History of the United States Stock Market

Updated: Jun 22, 2023


Dow Jones Industrial Average Total Performance by Decade

The United States stock market has been an instrumental part of the global economy for over a century. Every decade has brought its unique set of challenges and opportunities, shaping the market in different ways. Here is an insight into the history of the stock market by decade:


1900s: The 1900s saw the rise of industrialization and the emergence of new industries, such as automobiles and steel production. The Dow Jones Industrial Average (DJIA) was created in 1896, but it wasn't until the 1900s that it gained widespread popularity. The market experienced several notable crashes during this decade, including the Panic of 1907.


1910s: World War I brought about significant changes in the stock market during the 1910s. The market experienced a boom in the early 1910s, but the war caused a decline in stock prices. The end of the war led to a resurgence in the market, and the Roaring Twenties were just around the corner.


1920s: The roaring twenties was a decade of economic prosperity and stock market growth. The introduction of margin trading allowed investors to buy stocks on credit, leading to a stock market boom. However, this came to a crashing halt with the stock market crash of 1929, leading to the Great Depression.


1930s: The Great Depression was a decade of economic downturn and hardship. The stock market lost almost 90% of its value, leading to the implementation of laws and regulations to prevent such a crash from happening again.


1940s: The 1940s saw the end of World War II and the beginning of an economic boom. The GI Bill provided education and housing opportunities for veterans, and the baby boomer generation was born, leading to an increase in consumer demand and economic growth.


1950s: The post-war era was a decade of economic prosperity and stock market growth. The introduction of the S&P 500 index allowed investors to diversify their portfolios, leading to increased investment in the stock market.


1960s: The 1960s saw the rise of the technology sector, with the introduction of the first computer and the space race. This led to increased investment in technology stocks.


1970s: The 1970s saw the birth of the NASDAQ stock exchange, but was characterized by economic stagnation due to high inflation and oil prices. The stock market experienced a downturn, and the introduction of index funds allowed investors to diversify their portfolios and minimize risk.


1980s: The 1980s was a decade of economic growth and a stock market boom, fueled by the deregulation of the financial industry and the rise in the popularity of investment products such as mutual funds.


1990s: The 1990s saw the rise of the internet and technology sector and the creation of exchange-traded funds, leading to a surge in investment and the dot-com boom. However, this bubble burst in 2000, leading to a market downturn.


2000s: The 2000s saw the aftermath of the dot-com bubble and the rise of the housing market. The stock market experienced a downturn in 2008 due to the subprime mortgage crisis, leading to the Great Recession.


2010s: The 2010s saw a decade of economic recovery and stock market growth. The implementation of quantitative easing and low-interest rates by central banks led to increased investment in the stock market.


In conclusion, the stock market's history by decade has been shaped by various economic, political, and technological factors. Understanding the context of each decade is essential to make informed investment decisions and navigate the market successfully.


Check out the FDIC for more information on the United States economy across different decades.


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Sources:


Jacob Vernon Investment Advisor Representative


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