How Did Stock Markets Perform During Watergate?

The announcements today of charges against former Trump campaign chairman Paul Manafort have woken up markets this morning. The charges are not against anyone currently in the government, and no charges seem directly related to the investigation into Russia’s interference with U.S. elections or collusion with Russian officials.  But, where there is smoke there is fire, and this announcement has a lot of people wondering what else remains to be discovered.

It is not an direct comparison, but let’s say this gets as bad as Watergate and cover ups exist all the way up the ladder at the White House, what can investors expect to happen?


Stock Market Performance During Watergate Scandal

From the beginning of the Watergate scandal to a few weeks after Nixon’s resignation, U.S. stocks markets fell more than 40%.

It is easy to forget after 40+ years, but Watergate took a long time to play out. Here’s a quick bullet point timeline of the big events of the Watergate scandal, along with where the Dow Jones Industrial Average traded at the time:


  • June 17th 1972, the “White House Plumbers” were arrested breaking into the DNC office building at the Watergate office complex. Dow Jones Industrial Average at 941.
  • March 17th 1973, that the investigation moved to focus on anyone within the White House. Dow Jones Industrial Average at 952.
  • 9 months later, the Vice President resigned on October 10th 1973.
  • November 17th 1973 Nixon gave his “I’m not a crook” speech. Dow Jones Industrial Average at 862.
  • March 1st, 1974 saw an indictment against former Nixon aides. Dow Jones Industrial Average at 851.
  • July 24th 1974 – U.S. court orders Nixon to give up tapes.
  • July 27th 1974 – Impeachment process begins in Congress
  • August 9th, 1974, Nixon resigned. Dow Jones Industrial Average at 777.
  • Markets hit low on October 4th. Dow Jones Industrial Average at 587.


It was more than 2 years between the break-in at the Watergate complex and Nixon’s resignation.

It is important to note that there was a lot going on at this time. The OPEC oil embargo occurred at the end of 1973, Egypt and Syria attacked Israel, and inflation was beginning to get out of control. More than likely all of these events led to the stock market’s decline during this time. How much would the markets have gone down without the oil embargo, war or inflation? There is really no way to know.


First chart, the big picture. A few years before and a few years after the Watergate scandal. The stock market was in the middle of a very tough stretch, where it would not see new highs for a decade.


Both charts are from

Watergate stock market performance

With events annotated on timeline:

Timeline of Watergate with Stock Market Performance


This seems like a worst-case scenario for investors. Our economy today is much stronger than 1973-1974, and we are a long way away from any impeachment talk.

But history can prepare investors for what to expect should this situation get worse. From the beginning of the Watergate scandal to a few weeks after Nixon’s resignation, U.S. stocks markets fell more than 40%.

Stock markets would largely recover by early 1976.


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Categories: Stock Market History

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