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Quote of the Day
“Individuals who cannot master their emotions are ill-suited to profit from the investment process.”
— Benjamin Graham
This day in history marks the starting point for one of the most volatile periods during the 2010s. The period would be another stark reminder of the risks of trading based on fear and headlines.
August 8th – This Day in Stock Market History
August 8th, 2011 – U.S. Credit Rating Downgrade Triggers “Black Monday”
On this day, global markets nosedived in reaction to an unprecedented development: Standard & Poor’s had downgraded the United States’ AAA credit rating for the first time ever just days earlier (on Friday, August 5th).
By Monday August 8, panic hit Wall Street, with the S&P 500 index sinking nearly 7% and the Dow Jones Industrial Average collapsing 5.6% (a 634 point drop).
It was dubbed “Black Monday 2011”, as investors worldwide lost confidence in U.S. fiscal health amid a debt-ceiling standoff and Europe’s debt crisis.
Even an attempt by President Obama to calm markets mid-day failed, as stocks kept sliding. The Dow Jones Industrial Average fell more than 200 points after the president’s emergency press conference.
Ironically, the yield on the U.S 10-year treasury would decline significantly on the day. After opening at 2.497%, the yield on the 10-year would end the day at 2.339%.
While there were significant short-term moves in stocks and bonds, the long term impacts of the downgrade would be minimal. Stocks and yields would quickly recover and resume their long term trends.
Image Source: CME Group
August 8, 2018 – Musk’s “Funding Secured” Tweet Hangover Hits Tesla Stock
The day before, on August 7th, 2018, Elon Musk shocked markets by tweeting he had “funding secured” to take Tesla private at $420 per share. Tesla’s stock surged 11% that day, closing around $379 as many initially believed him.
But by the next day, doubts crept in about the tweet’s truthfulness. Tesla’s stock gave up much of its gain, falling back to about $352 per share, a decline of more than 7%.
The episode prompted an SEC investigation, since CEOs are not allowed to make false or market-moving statements so casually. Musk and Tesla would be fined a combined $40 million, and the SEC would force Musk’s social media postings to be reviewed by a compliance department within Tesla.
Reads of the Day
What History Reveals About U.S. Debt Downgrades from CME Group – This article explores U.S. credit downgrades in 2025 by Moody’s, while putting it into historical perspective by comparing it to previous actions by S&P in 2011 and Fitch in 2023.
Despite initial market turbulence—such as a sharp S&P 500 sell-off in 2011—the article highlights how markets rebounded in subsequent months, showcasing the U.S.’s resilience as the global reserve currency. It underscores that such downgrades tend to stir short-term volatility rather than long-term declines, suggesting that fundamentals like Treasury demand and institutional investor confidence remain steadfast. This piece offers a grounded reminder that headline risk often gives way to recovery—especially when underlying economic anchors remain strong.
The Quants by Scott Patterson – This book offers a behind-the-scenes look at the rise of mathematicians and physicists on Wall Street who used complex algorithms to dominate trading. These highly leveraged, high frequency strategies help fuel extreme market volatility.
The book traces how these quant funds amassed immense power but also created fragile feedback loops that contributed to meltdowns like the 2007–2008 financial crisis. Patterson’s reporting sheds light on the hidden risks behind the quants’ seemingly precise models and the illusion of control in modern markets. For investors, The Quants is not only a cautionary tale about overreliance on data without understanding the bigger picture, but a glimpse into the inter-workings of Wall Street and the movements we see in the markets day-to-day.