The S&P 500 has surged nearly 50% since Tesla Inc and SpaceX CEO Elon Musk drew parallels between the current market conditions and the infamous 1929 stock market crash.
What Happened: This remarkable rally, was highlighted by CNBC’s Carl Quintanilla.
On Mar. 15, 2023, amid a flurry of bank failures that sent shockwaves through the financial sector, Musk tweeted, “Lot of current year similarities to 1929.”
This ominous comparison to one of the darkest chapters in economic history came in response to a now-unavailable post by Ark Invest CEO Cathie Wood, known for her bullish stance on disruptive technologies.
Musk’s tweet coincided with the collapse of Silicon Valley Bank (SVB), Signature Bank, and Silvergate Capital, events that briefly paralyzed financial markets and evoked memories of the 2008 financial crisis.
The turmoil led to significant market value losses for banking giants like JPMorgan Chase and Bank of America, though they later rebounded following swift regulatory intervention.
See Also: Inflation Data ‘Will Be Watched Like A Hawk’ Friday After Fed’s Interest Rate Cuts
Why It Matters: The 1929 reference was particularly chilling for those familiar with financial history. The stock market crash of that year, infamously known as Black Tuesday or the Great Crash, triggered the Great Depression, an economic catastrophe unparalleled in modern times.
During that fateful October, the Dow Jones Industrial Average plummeted 23% in just two days, setting the stage for a decade of economic hardship.
While Musk didn’t elaborate on the specific similarities he observed between 1929 and the current market, Wood had previously suggested that the rise of cryptocurrencies like Bitcoin BTC/USD and Ethereum ETH/USD had led to the first decline in bank deposit levels since the Roaring Twenties. The observation hinted at potential systemic risks lurking beneath the surface of the financial system.
However, contrary to these gloomy forecasts, the S&P 500 has demonstrated remarkable resilience. According to data from Benzinga Pro, the index closed at 5,745.37 on Thursday, representing a staggering 47.62% increase from its level of 3,891.93 on the day of Musk’s tweet.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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