When news of the assassination spread on television and radio and shock and grief took hold, stock prices took a sharp dive. On the day JFK was shot and killed in Dallas by Lee Harvey Oswald, the benchmark Standard & Poor's 500 plunged 2.8%. A shocked Wall Street shut down the New York Stock Exchange at 2:07 p.m. EST. Tomorrow marks the 50th anniversary of Kennedy's death.
"It was a shock to the market," says Sam Stovall, chief equity strategist at S&P Capital IQ. "There was chaos and total uncertainty, from a political perspective."
Adding to the market downturn: An enormous scandal that broke on Nov. 19, enveloping American Express and several brokerage houses, as loans secured by tanks of salad oil proved to be worthless.
But the negative market reaction was short-lived, as is often the case after scary stock market shocks, such as wars, terror attacks, financial scares and assassinations. The losses were confined to a single day, and the market had regained all of its losses two days later, according to S&P Capital IQ data.
Still, the first-day reaction to JFK's unexpected death was among the biggest in response to unanticipated shocks over the past 70 years, according to S&P Capital IQ.
Indeed, the nearly 3% one-day drop on the day the nation's 35th president was assassinated was bigger than first-day plunges following the scare over the Cuban Missile Crisis (-2.7%) on Oct. 10, 1962; the attempted assassination of President Ronald Reagan (-1.2%) on March 30, 1981; the resignation of President Richard Nixon (-1.3%) on Aug. 8, 1974; and the collapse of the hedge fund Long Term Capital Management (-2.2%) on Sept. 23, 1998.
In fact, the 2.8% drop was bigger than the median drop of 2.4% following major shocks dating back to World War II, S&P Capital IQ data show.
In general, the stock mark! et tends to rebound quickly following shocks, once it is determined that the economy won't be irreparably harmed by the event, says Stovall. And despite the tragedy of JFK's death, the market quickly realized that it was an emotional event, not an economic event. The U.S. also has a well-crafted succession plan at the highest levels of government, making the transition to a new president, such as Lyndon B. Johnson, seamless.
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"Wall Street assessed very early on that the assassination, while tragic, would not alter U.S. or global growth," says Stovall. "It's not as if the death of the president would close shipping lanes, or cause oil wells to shut off or interest rates to spike."
In contrast, shocks that caused bigger one-day drops than the Kennedy assassination included the attack on Pearl Harbor in 1941, the 9/11 terror attacks back in 2001 and the Lehman Brothers bankruptcy in the fall of 2008.
The stock market tends to be resilient. And investors jump back into the market after shocks to take advantage of depressed prices caused by panic surrounding the shock.
In fact, on a median basis, shocks normally cause stocks to bottom out 6 days after the shock hits, with a total drop of 5.3%. The market has taken just 14 days to recover all its losses, S&P Capital data show.
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