a b c d e f g h i j k l m n o p q r s t u v w x y z

What is Black Tuesday?

Definition: Black Tuesday represents the day when the Wall Street crashed, causing the Dow Jones Industrial Average to collapse and leading to the Great Depression from 1929 to 1932.

What Does Black Tuesday Mean?

What is the definition of black Tuesday? From Thursday, October 24th (known as Black Thursday) to Monday, October 28th the New York Stock Exchange was on a downward trend with high trading volume and selling orders. On Tuesday, October 29, 1929, the NYSE collapsed and closed down as the brokers considered it as the best solution to avoid further decline and financial distress. According to many historians, the Black Tuesday was the beginning of the Great Depression because it put an abrupt end to the bullish U.S. market but also to consumer confidence to the U.S economy.

Letís look at an example.

Example

Between October 24 and October 29, it is estimated that the U.S. stocks lost more than $26 billion in value. According to historians, investors and traders were jumping out of windows frustrated for having lost all their money, and the situation was even worse for those who have borrowed money to buy stocks in the rising U.S. market a few days before the crash.

Evidently, Black Tuesday is a major turning point in the U.S economy as many investors who tried to hedge their risk and participate in the stock market were financially destroyed as they have sold all their assets to be able to pay off their debts, yet many of them could not repay them at all. As a result, many U.S. banks collapsed, businesses shut down, and the U.S disposable income declined sharply.

Between 1929 and 1932, the industrial production in the United States declined by 46%, the wholesale prices declined by 32%, the foreign trade by 70%, while unemployment surged 607%. Similarly, the Great Depression era affected other economies as well. In the U.K. and Germany, unemployment increased by 129% and 232%, respectively, whereas industrial production declined by 23% and 41%, respectively.

Summary Definition

Define Black Tuesday: Black Tuesday means the day of the biggest stock market crash in US history.

Search for more articles about this term:




Back to Accounting Terms