Let”s take a look at some of the key dates for World War II and
how the U.S. stock market reacted.
The Dow Jones finished 1938 at 154.76.
3/16/39 – Hitler marches into Czechoslovakia. If we didn”t take
him seriously before, we had to now. Dow closes that day at
147.54. 3/17: 143.81.
9/1/39 – The Wehrmacht blitzes Poland. Dow closes at 135.25.
9/2: 138.09. After two days off for Labor Day*, the market
rallies 7% to close at 148.12 (9/5). Unbelievable. By 9/12 the
market hits 155.92. Warsaw falls on 9/27, Dow closes at 153.08.
*In these days the stock market was open Mon.-Sat.
11/30/39 – Finland invaded by the Soviet Union. Dow closes at
145.69
Market treads water over the winter as the world knows that
Hitler will eventually make a move in the West. But first.
4/9/40 – Nazis land in Denmark (which immediately surrenders)
and then quickly move into Norway. Dow is at 150.31.
5/9/40, the Wall Street Journal writes that an invasion of Holland
“would awaken fears that England was about to be attacked.”
The next day, 5/10, two things happen. Winston Churchill
becomes prime minister of Great Britain. Hitler swarms into the
Netherlands, Belgium and Luxembourg, on his way to France.
Dow was 148.17 on 5/9. 144.77 on 5/10 (a 2.3% decline).
[Remember that with the time difference between the U.S. and
Europe there was usually plenty of time for the U.S. market to
react the same day].
5/12/40 was a Sunday. On 5/13, upon further reflection, the
markets realized that all of this bloody action in Europe (coupled
with Japan”s Asian adventures) probably wasn”t a good thing.
The Dow falls 5% to close at 137.63. A few days later a Journal
market column reports that “while numerous practical-minded
individuals in Wall Street take the view that more intense
warfare will be stimulating to our industries.they recognize the
dangers inherent in a swift German victory.” By 5/24 the Dow
sits at 113.94.a 23% decline in two weeks (or about 2400 Dow
points at today”s levels).
On 6/3 and 6/4, the evacuation of 338,000 British and French
troops from Dunkirk is under way. The Dow finishes at 115.79
on 6/4. 6/14 the Germans take Paris – Dow sits at 122.27.
The Battle of Britain takes place mostly between 7/31/40 (Dow
126.14) and 10/31/40 (Dow 134.61).
6/22/41 – The Nazis attack the Soviet Union. The market is
closed. On 6/23/41 the Dow closes at 123.97 (up from 122.51 on
6/21).
12/6/41 – Dow sits at 116.60.
12/7/41 – Pearl Harbor, a Sunday.
12/8/41 – Dow closes at 112.52 (off 3.4%).
By 4/28/42 the Dow has fallen to 92.92. From its peak of 155.92
on 9/12/39, the market has declined 40%. Or looked at another
way, 39% from a level of 151.29 on 4/8/40.
[Source for two quotes, Journal article written by Deborah
Lohse, 1996]
Brian Trumbore
