On this day, 3 July 1884, American journalist Charles Dow published the first-ever stock index: the Dow Jones Transportation Average (DJTA). Featuring 11 companies—nine of them railroads—the index aimed to provide a clear, daily snapshot of stock market performance. This innovation marked a foundational moment in financial journalism and modern investing. Dow’s approach laid the groundwork for analysing market trends and would eventually give rise to indices like the Dow Jones Industrial Average (DJIA), introduced in 1896.
A brief history of the stock market
The idea of trading shares in companies dates back to the early 1600s in Amsterdam with the Dutch East India Company. London followed suit with its own stock exchange in 1801, and by the late 19th century, New York had become a global financial hub.
Over time, the stock market grew from a tool for capital formation into a central pillar of modern economies. The introduction of indices, beginning with the DJTA, allowed investors to gauge the health of sectors and the broader economy in real time.
Major market crises
1929 Wall Street crash & the Great Depression
In late October 1929, speculative fever came to a brutal halt. After years of booming stock prices fuelled by easy credit and rampant speculation, the market crashed on Black Tuesday (29 October), wiping out billions in value. Within days, the DJIA fell nearly 25%, and the crash triggered a chain reaction of bank failures, business closures, and mass unemployment. By 1933, one in four Americans was jobless. The crisis exposed the need for stronger regulation, leading to the creation of the Securities and Exchange Commission (SEC) in 1934.
Black Monday (1987)
On 19 October 1987, global markets plunged in unison, with the DJIA collapsing by 22.6%—still the largest one-day percentage drop in its history. The crash was caused by a mix of overvaluation, programme trading (automated sell-offs), and investor panic. While the economic fundamentals weren’t as weak as in 1929, the scale and speed of the drop shocked financial systems worldwide. It prompted central banks to coordinate responses and highlighted the risks of emerging computerised trading systems.
Dot-com bubble (2000–2002)
Fuelled by excitement over the internet and new technologies, investors in the late 1990s poured money into tech startups—many of which had little or no revenue. By 2000, valuations became unsustainable. The Nasdaq Composite, heavily weighted with tech stocks, crashed by nearly 80% over the next two years. The collapse led to widespread layoffs and bankruptcies, including high-profile failures like Pets.com and Webvan. It marked the end of the irrational exuberance era and ushered in more cautious scrutiny of business fundamentals.
Global financial crisis (2007–2008)
One of the most severe financial crises in modern history, it began with the bursting of the US housing bubble. Risky mortgage lending practices, combined with complex financial instruments like mortgage-backed securities and credit default swaps, created a fragile financial ecosystem. When Lehman Brothers collapsed in September 2008, panic spread globally. Stock markets plunged, credit froze, and major institutions needed government bailouts. The S&P 500 lost more than 50% of its value from peak to trough. In response, central banks slashed interest rates and launched unprecedented monetary policies like quantitative easing.
COVID-19 crash (2020)
As the pandemic spread globally in early 2020, markets reacted with swift and deep sell-offs. In just 22 trading days, the S&P 500 dropped by 34%—one of the fastest bear markets in history. Entire economies were locked down, and uncertainty reigned. However, massive government stimulus packages and central bank interventions led to a rapid V-shaped recovery. The crash revealed the interconnectedness of health crises and financial markets and reinforced the power of policy tools to stabilise panic.
The stock market today
Markets in 2025 are characterised by high-speed trading, artificial intelligence, and widespread retail participation via apps like Robinhood, eToro, and Freetrade. Index funds and ETFs now dominate investment portfolios, while ESG considerations are influencing stock valuations and capital flows.
Globalisation means that shocks in one region quickly affect others, yet markets also reflect optimism: tech stocks, green energy, and health innovation continue to lead gains.
Central banks, particularly the US Federal Reserve and the European Central Bank, remain influential players, using interest rates and liquidity policies to stabilise growth and inflation.
New realities: Cryptocurrencies and financial disruption
The rise of cryptocurrencies has transformed the financial conversation. Bitcoin, created in 2009, was once seen as a fringe asset but is now held by institutional funds, hedge funds, and even governments. Ethereum and other platforms have enabled decentralised finance (DeFi), allowing lending, borrowing, and trading outside traditional systems.
Crypto markets are still highly volatile, susceptible to hacks and regulatory crackdowns, but they’ve introduced new thinking about money, value, and trust. Nations are now experimenting with Central Bank Digital Currencies (CBDCs) to modernise payments while maintaining monetary control.
Despite regulatory uncertainty, the blockchain revolution is challenging traditional finance and may eventually lead to hybrid models of digital and fiat-based markets.
From a small rail-focused index in 1884 to today’s complex, tech-driven global markets, the Dow Jones’ first publication marks a symbolic origin point for modern investing. Each financial crisis along the way has tested the system’s resilience—and forced reforms. Today’s markets face new challenges and innovations, from climate risk to digital currencies. But the core purpose remains: to allocate capital efficiently, reflect economic performance, and shape the future.
Also read: ON THIS DAY: Aviation history was made, twice
Featured photo source: Investopedia / Julie Bang
