This Day In Market History: Gorbachev Consolidates Soviet Union Power

Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.

What Happened? On this day in 1988, Soviet Union President Mikhail Gorbachev consolidated his power in the region by replacing the leaders of Armenia and Azerbaijan.

Where The Market Was: The Dow finished the day at 1,952.59. The S&P 500 traded at 253.02.

What Else Was Going On In The World? In 1988, the U.S. Senate ratified the Intermediate-Range Nuclear Forces Treaty negotiated by U.S. President Ronald Reagan and Gorbachev. The first major computer virus-infected devices connected to the early internet. A gallon of 2% milk cost $1.89.

The Beginning Of The End Of The Soviet Union: Gorbachev took power in the Soviet Union in 1985, making big promises about domestic policy reform. From the very beginning, he faced a climate of social and political unrest, particularly from more conservative opponents. 

Communist Party leaders Karen Demirchyan of Armenia and Kyamran Bagirov of Azerbaijan were particularly vocal in their criticism of Gorbachev, and social unrest in the two republics ultimately led to tensions between the two regions.

On May 21, 1988, Gorbachev stepped in and replaced both leaders with hand-picked successors. The temporary fix couldn’t save Gorbachev or the Soviet Union. Gorbachev resigned in 1991 and the Soviet Union disbanded shortly thereafter.

U.S. investors were mostly immune to the political turbulence in the Soviet Union. The S&P 500 finished 1988 up more than 12%.