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Portfolio > Economy & Markets > Stocks

Pearl Harbor Remembered: Market Reaction to That Infamous Day

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It was near 70 degrees and partly cloudy in Honolulu on the morning of Sunday, Dec. 7, 1941. Just prior to 7:50 a.m.–the time when the Japanese pilots began their assault—U.S. military personnel and their families lay fast asleep after a Saturday night on the town. The next day, President Roosevelt addressed Congress and uttered the famous phrase, “A date which will live in infamy.” The United States was at war. In the wake of the attack, Pearl Harbor, and America for that matter, would never be the same.

The sad irony is that Americans held a strong “isolationist” belief at the time, and had it not been for the vicious assault on the U.S. naval base at Pearl, our introduction into WWII may have been delayed, perhaps even avoided.

For the 12 months prior to the attack, the average daily trading volume on the Dow Jones Industrial Average was about 560,000 shares. During the following three weeks, trading volume nearly tripled to 1.6 million shares per day. What was a bit surprising was its performance.

With an event as serious as this, most would expect fear to reign and stocks to sell off with great fervor. Although stocks did decline, the rate of descent was far from severe. In fact, on the Friday before the attack, the DJIA had closed the day at 115.90. On the Monday after the attack, it lost 2.92%, closing at 111.53. On Tuesday, it fell to 107.56 for a loss of 2.89%. However, by the time Americans were singing “Auld Lang Syne,” the DJIA stood at 110.96, down less than 4%. The following year it rose 7.6%.

With America’s advent into the war, the economic engines began to hum. As factories retooled to manufacture tanks instead of trucks, planes instead of Pontiacs, the unemployment rate began to fall. The economy was on a path to recovery, and as corporate earnings grew, the stock market embarked on a 20-year binge.


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