3 Super Rebounds after the Fed Rescued the US Stock Market after the US Stock Market Crashed in History
2008 Financial Crisis
Background of the Crisis:
• The subprime mortgage crisis triggered a global financial crisis, and US stocks plummeted.
Federal Reserve Response:
• Rate Cuts: In September 2008, the interest rate was lowered from 2% to 1.5%, and finally to 0-0.25%.
Market Rebound:
• Rebound: Starting from March 2009, the market rebounded rapidly. In 2009, the S&P 500 rose by 23.5%. By 2013, the S&P 500 and the Dow Jones Industrial Average had basically returned to their pre-crisis levels and continued to set new highs.
2010 Flash Crash
Background of the Event:
• On May 6, 2010, due to trading system failures and algorithmic trading, the Dow Jones Industrial Average fell by about 1,000 points in just a few minutes, and then quickly rebounded.
Federal Reserve Response:
• Market Structure Reform: The Federal Reserve and other regulatory agencies carried out market structure reforms to improve market stability and transparency.
Market rebound:
• Rebound: Despite a short-lived market volatility, the market rebounded quickly in the following days, recovering most of its losses. For the entire year of 2010, the S&P 500 rose 12.8%.
2020 COVID-19 stock market crash
Crisis background:
• The global outbreak of the COVID-19 pandemic triggered market panic and economic lockdowns.
Fed response:
• Emergency rate cuts: The Fed made two emergency rate cuts, lowering interest rates to 0-0.25%.
Market rebound:
• Low: The S&P 500 hit a low of 2,237 on March 23, 2020.
• Rebound: U.S. stocks rebounded quickly. The S&P 500 and the Dow Jones Industrial Average quickly recovered from their lows in March and hit record highs in the second half of 2020.