October 22nd – This Day in Stock Market History – Cuban Missile Crisis Begins
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Quote of the Day
This day marks the anniversary of the Cuban Missile crisis. Even stone cold investors like Warren Buffett were scared:
“Warren was afraid. He was interested in studying the attitudes that led to extreme nationalism, and how wars could be prevented. He was always trying to calculate the odds of the world’s blowing up.”
-Warren Buffett’s friend Dick Holland, as quoted in Roger Lowenstein’s Buffett: The Making of an American Capitalist
October 22nd – This Day in Stock Market History
October 22nd, 1962 – President Kennedy announces a blockade on Cuba and confirms rumors that the Soviets are setting up missile sites in Cuba.
The Dow Jones Industrial Average would drop 1.85% the next day on the news, and would eventually decline 24% from peak to trough during the Cuban Missile Crisis.
October 22nd – 1997 – South Korea announces that it is taking custody of Kia motors, a $760 million rescue plan aimed at shoring up the troubled economy.
Korea’s main stock index would rise over 6% on the announcement, its largest rise in history. However, it would take until December 3rd for the markets to bottom, when South Korea and the IMF agreed on a $55 billion rescue package for the country.
The bailout came during the depths of the “Asian Flu”, a financial panic that greatly impacted many Asian economies.
On this day, the Hang Seng, Hong Kong’s stock market, would also suffer one of their worst days in history, falling more than 10% on the day (and at one point down over 16% on the day!)
Hong Kong’s stock market would be one of the most impacted during the crisis, falling more than 50% from 1997 through 1998:
October 22nd, 2008 – The Dow Jones Industrial Average closes down 526 points, at the time its 7th worst point decline in history as the 2008 financial crisis intensifies.
During the day the Dow was down as much as 698, but recovered slightly before the close. The cause of the decline seemed to be centered around earnings releases that day, and the general fear within the market during this period in the financial crisis:
Wachovia Bank issued its quarterly earnings, reporting a staggering $24 billion loss (Wall St was expecting a slight profit from the bank!)
Boeing, Amazon and AT&T also all released earnings that were less than expectations.
After this decline, the Dow was down 40% since the financial crisis began, the S&P 500 has lost almost 43%, and the Nasdaq has fallen 43.5%. Markets would still have 5 months of declines before they found a bottom in March 2009:
Best October 22nd in Dow Jones Industrial Average History
1906 – Up 1.96%, 1.33 points
Worst October 22nd in Dow Jones Industrial Average History
2008 – Down 5.82%, 526 points.
Watch and Reads of the Day
Here is Kennedy’s address to the nation on the Cuban Missile Crisis:
In his book on Buffett, Lowenstein goes on to say that during the Cuban Missile Crisis, Buffett began reading philosopher Bertrand Russell almost excursively. Here’s a book that features some of his most prominent work:
The Basic Writings of Bertrand Russell (Routledge Classics) (Volume 23)
<—- Go to Previous Day: October 21st: 1987 – Stocks rebound after Black Monday, Dow rises 10%
Go Forward One Day: October 23rd: 1929 – Stocks fall 6%, first significant decline of great depression —>