Definition
The term Black Tuesday refers to October 29, 1929, which marked the end of the Roaring 20s, and the starting point of the Great Depression. On Black Tuesday, the Dow Jones Industrial Average would fall 30 points, which was around 12% of its value.
Explanation
On October 29, 1929, also known as Black Tuesday, the Dow Jones Industrial Average (DJIA) would decline 30 points, or lose 12% of its value, in just a single day. At that time, the average daily trading volume on the stock exchange was around four million shares; however, on Black Tuesday, a record 16.4 million shares were exchanged. It would take nearly 40 years for the stock exchange to surpass this trading volume record.
As panic selling ensued, the systems used to track the values of securities could not keep pace with the record trading volume. At one point, ticker tapes were running nearly three hours behind the market. Generally, historians believe Black Tuesday would mark the beginning of the Great Depression. From Black Thursday through Black Tuesday, investors would lose nearly $30 billion.
The Stock Market Crash of 1929 eventually led to tighter regulation of the securities market in the United States. The Securities Act of 1933 would ensure buyers receive complete and accurate information before investing in securities. The Securities Exchange Act of 1934 would govern the secondary trading of securities (including stocks, bonds, and debentures), and establish the Securities and Exchange Commission (SEC) to oversee and enforce these laws.
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