The Dow Industrials have been as erratic as Britney Spears on her way to a child custody hearing. On Wednesday, the index of 30 of the largest U.S. stocks plummeted more than 200 points, reversed course and closed the day up more than 300 points. It was an impressive bounce, in a neck-snapping sort of way. But was it unprecedented?
Paul Kedrosky ran the numbers on his “Infectious Greed” blog, and determined that only one other trading day moved from at least a 1-percent loss to a positive close to produce a wider variance than Tuesday’s 625-point swing. That was a 701-point reversal on July 24, 2002.
But, as Kedrosky correctly points out, it’s all relative. A 600-point swing in the Dow sounds impressive, but the index currently is wobbling around the 12,000-point level. Ranking those dips and dives by percentage is a more accurate way to compare today’s volatility with that of other decades. And by that measure, Wednesday’s wild trading day is not even among the top 10.
Four of the six biggest percentage swings occurred from 1929 to 1937. The largest ever was a 12.9 percent move in October, 1987.
So the next time someone tells you the Dow is up or down 200 or 300 points, consider the percentages.