The Effect of the 2008 Recession on the Dow-Jones Industrial Average On October 9, 2007, the Dow closed at its pre-recession all-time high of more than $14,000 per share. However, fourth quarter GDP growth was -1%, signaling the beginning of the recession. The Dow started falling slowly. After the failure of Bear Stearns in April 2008, and a negative GDP report in Q2 2008, the Dow plummeted to 11,000. Many analysts felt that this 20% decline was the market bottom. 2008 was a historic year for the Dow Jones Industrial Average and the overall Stock Market. 2008 started off with the Dow Jones breaking down through 13,000 with massive volume. There is a saying that states that whatever the Stock Market does in January is how the rest of the year would go. The saying turned out to be true in 2008. Wall Street stocks were plummeting in January and were reduced by one half throughout the year. However, on Monday, September 15, 2008, Lehman Brothers declared bankruptcy. On Wednesday, anxious bankers withdrew $144 billion from money market funds, nearly causing a collapse. In response, the Dow sank 13% in October. By November 20, 2008, it fell to 7,552.29, a new low. This was not yet the true market bottom. The Dow went up to 9,034.69 on January 2, 2009 before falling down to 6,594.44 on March 5, 2009. Between its highest and its lowest, the Dow plummeted over 50% in just 17 months. The stock market, as measured by the Dow Jones Industrial Average, has historically performed similarly to the economy. Usually a bear market occurs during a recession, and a bull market during an expansion. The history of the stock market since the Great Depression shows these are a natural, though painful, part of the business cycle. However, the Dow closing history in this recession is worse than any other. So far, the Dow has dropped over 50%, the worse decline since the 80% drop during the Great Depression.