The Best Stock Market Day in History Would Push the Dow Up 6,700 Today

The Dow Jones Industrial Average rose 15.3% on March 13, 1933, which is the all-time one-day record. A similar increase today would push the Dow up 6,700 points. The S&P 500 has risen by almost that percentage in the past year.

The 1933 Dow jump was due to a move by President Roosevelt to stop a Great Depression bank panic. Americans had lost faith in the bank system. Roosevelt had to put brakes on the frenzy. So, he declared a bank holiday to steady the system.

What Could Trigger Such a Gain Today?

Could the market rise as much today? Maybe. The sole possible trigger in the short term would be an end to trade wars if U.S. tariffs on all imports from any country remained at 10%. There is worry that 30% tariffs on the European Union could cause an escalation pattern. The figure planned for Canada and Mexico is currently 30%. The figure for China could also be that high.

Pessimists about tariffs say that they could take U.S. inflation to near 10%. The Cato Institute puts the number at 9.5%. A 9.1% increase in the consumer price index (CPI) in June 2022 jolted the United States. That was a 40-year high. The Federal Reserve raised rates seven times in the year after that. The current CPI rate of over 2% is considered “stubborn.” It is hard to imagine what a 9% increase would be called.

Tariffs are often called a tax on goods bought by consumers. These taxes erode household budgets. The household budget challenge reduces consumer spending, which is the primary engine of gross domestic product (GDP). A fall in GDP eventually causes a recession. Recessions trigger job losses. The downward spiral can last for as much as two years. The Great Recession lasted between a year and a half to two years, depending on the yardstick.

The stock market is rising now. In part, it is because investors believe that the United States and its trading partners will settle on tariff rates lower than those the Trump administration says will start on August 1. Calling off the plan would prompt a substantial upward jolt to the economy, and the market would react appropriately. Does that trigger a 15% jump in the Dow? Who knows. It has happened before.

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