This day in market history, December 1: The subprime mortgage crisis officially declared a recession

Every day, Benzinga looks back on a milestone related to the market that occurred on that date.

What happened? On December 1, 2008, the National Bureau of Economic Research officially declared a recession in the United States.

Where was the market: The Dow Jones Industrial Average was trading at 8,149.09 and the S&P 500 was trading at 816.21.

What else was going on in the world? In 2008, President George W. Bush signed the $ 700 billion Emergency Economic Stabilization Act of 2008. The Federal Reserve launched the Term Auction Facility to provide short-term loans to cash-strapped banks. Oil prices hit a record high of $ 147 per barrel.

Beginning of the 2008 recession: By the time the NBER officially declared the 2008 economic downturn a recession on December 1, 2008, most investors had already been in crisis mode for months. A recession is defined as two consecutive quarters of negative GDP growth, so the official NBER statement always comes about six months after the economy begins to contract.

In 2008, stocks did not react well to the news of a recession. The Dow Jones fell 7.7% the day the recession was declared. At the close that day, the Dow Jones was down 38.6% for the year and 42.5% from its all-time high on October 9, 2007.

Bank stocks have taken a hit. Actions of JPMorgan Chase & Co. (NYSE: JPM) and Goldman Sachs Group Inc (NYSE: GS) each fell about 17% that day.

Crude oil prices also fell 10% to below $ 50 / barrel. Instead, investors crowded into US Treasury bonds. Yields on 10-year bonds fell to an all-time high of 2.65%, while 30-year Treasury yields fell to a record 3.18%.

Unfortunately, the worst of the crisis was not over. The Dow Jones would eventually drop 20.9% before hitting its financial crisis low of 6,443.27 on March 6, 2009.

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