On the first day of trading since the New York Stock Exchange (NYSE) reopened in November 1914 after being shut down due to the start of World War I earlier that year, the Dow Jones Industrial Average suffers its worst percentage drop (24.39 percent) since it was first published in 1896.
American officials had decided to reopen the NYSE after the longest-ever suspension of trading because it was thought that bond trading, albeit with a set of restrictions designed to safeguard the American economy, could help raise money for the war effort. The precipitous fall of the Dow Jones Industrial Average (DJIA), the most important of various stock indices used to gauge market performance, indicated the risky nature of business during the first months of war, when nobody knew exactly how long the war would last or what role the U.S. would eventually end up playing in the conflict.
Despite the tough economic climate that would continue throughout the war—including a 40-percent drop in the DJIA from late 1916 to early 1917—World War I was a clear turning point in the realm of international finance. New York would replace London as the top investment capital and the New York Stock Exchange would become, for better or for worse, the undisputed barometer of the world’s economies.