What Is Black Thursday? History, Significance, and Aftermath

Updated April 14, 2023

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What Is Black Thursday?

Black Thursday is the name given to an infamous day in stock market history: Thursday, Oct. 24, 1929, when the market opened 11% lower than the previous day’s close, and panicked selling ensued throughout a day of heavy trading. Black Thursday is considered the first day of the Great Stock Market Crash of 1929, which continued until Oct. 29.

Black Thursday also refers to shopping and sales that begin on Thanksgiving Day, a preview of Black Friday, the beginning of the holiday shopping season.

Key Takeaways

Black Thursday refers to Thursday, Oct. 24, 1929, when the Dow Jones Industrial Average (DJIA) plummeted drastically as soon as trading opened and an unprecedented number of shares changed hands.
Black Thursday is considered the first day of the Stock Market Crash of 1929, which lasted until Oct. 29, marking the end of a decade-long bull market and the onset of the Great Depression.
Black Thursday can also refer to Thanksgiving Day, when some retailers start offering sales and deals, in anticipation of the onset of the holiday shopping season.

Understanding Black Thursday

Black Thursday marked the beginning of the end of one of the longest-running bull markets in U.S. history. For nearly the entire decade of the 1920s, stock prices had been steadily climbing, rising to unprecedented heights. The Dow Jones Industrial Average (DJIA) increased sixfold from 63 in Aug. 1921 to 381 in Sept. 1929.

However, even before the New York Stock Exchange (NYSE) opened on that fateful Thursday in 1929, the elevated equity prices were making investors and financial experts uneasy. On Sept. 5, at the annual National Business Conference, economist Roger Babson predicted that “sooner or later a crash is coming, and it may be terrific.” Throughout September, stock prices gyrated, with sudden declines and rapid recoveries.

The jitters continued into October. In fact, on Oct. 23, the Dow fell 4.6%. A Washington Post headline exclaimed, “Huge Selling Wave Creates Near-Panic as Stocks Collapse.”

By this time, the stock market had already fallen nearly 20% since its record close of 381 on Sept. 3. When trading opened on Thursday, Oct. 24, the Dow fell 11% in the first few hours. Even more ominous was the heavy trading volume: It was to hit a record 12.9 million shares—three times the normal amount—by day’s end.

The three leading banks at that time were Morgan Bank, Chase National Bank, and National City Bank of New York. Putting together a $750 million fund, they bought stocks to attempt to restore confidence in the markets. By the end of the trading day, the Dow actually recovered a bit, closing 2% down, at 299.47.

Black Thursday changed the widely held perception that—as one contemporary economist put it—“stock prices have reached ‘what looks like a permanently high plateau.’”

Aftermath of Black Thursday

The financiers’ and banks’ propping-up efforts worked for a time. On Friday, the Dow closed higher, at 301.22.

However, on Black Monday, Oct. 28, it fell almost 13% in light trading, to 260.64. And that triggered an all-out panic the next day. By the end of trading on Tuesday, Oct. 29—Black Tuesday—the Dow had fallen to 230.07, a 12% loss.

After the crash, the Dow continued sliding for three more years, bottoming out on July 8, 1932, at 41.22. It had lost almost 90% of its value since its high on Sept. 3, 1929. In fact, it didn’t reach that high again for 25 years, until Nov. 23, 1954.

Many investors—both institutional and individual—had borrowed or leveraged heavily to buy stocks, and the crash that began on Black Thursday wiped them out financially, leading to widespread bank failures. That, in turn, became the catalyst that sent the United States into the Great Depression of the 1930s.

Significance of Black Thursday

While the panicked trading on Black Thursday fueled more panic on subsequent days, the Stock Market Crash of 1929 was actually caused by several factors. They include excess production in several industries, an agricultural recession, rampant speculation (or fear of it), the widespread use of margin to buy stocks, dubious accounting and leveraging practices by investment trusts, the incipient regulation of public utility companies, and a tightening of the money supply by the Federal Reserve (Fed).

The Stock Market Crash of 1929 did have one constructive result: It triggered a complete overhaul of the U.S. securities industry. The U.S. Securities and Exchange Commission (SEC) was established, and substantial new regulations were introduced by legislation such as the Securities Act of 1933 and the Securities Exchange Act of 1934.

Black Thursday Shopping

In recent years, Black Thursday has had a more positive connotation attached to it.

It’s an affectionate shoppers’ nickname for the Thanksgiving holiday in the United States. Many retailers are open on Thanksgiving in a bid to get an early start on the frenzied shopping of Black Friday—and to compete with increasingly popular online stores and e-commerce sites.

In the case of Black Friday, the term “black” refers to the black ink traditionally used to record a profit by accountants, while red ink was used to record losses.

The shopping version of Black Thursday has led to growing resistance among employees of retailers, who complain that they are forced to leave Thanksgiving family dinners early to report to work on time.

What Was the Decrease in Stock Value on Black Thursday?

As measured by the Dow Jones Industrial Average (DJIA), the leading index of the day, stocks declined 2% in value on Black Thursday.

What’s the Difference Between Black Thursday and Black Tuesday?

Both are part of the Great Stock Market Crash of 1929, but at opposite ends. Black Thursday, Oct. 24, 1929, is seen as the beginning of the crash. Some 12 million shares changed hands, and the Dow fell sharply in the opening hours of trading, though it recovered somewhat to close six points down from the previous day—about a 2% decline in value.

Black Tuesday occurred five days later, on Oct. 29, and marked the final—and worst—day of the crash. In a record trading volume of 16 million shares, stock prices collapsed, and the Dow dropped more than 30 points, losing 12% of its value in that one day.

Why Did Stock Prices Fall So Sharply on Black Tuesday?

Confidence in the stock market had been badly shaken by the significant declines in the Dow on the previous Thursday (Black Thursday) and Monday (Black Monday). Though a consortium of banks tried to restore investors’ faith via heavy buying, panic built upon the previous panic. As prices slid, many investors faced margin calls: They had borrowed money to buy stocks, and now they had to come up with more funds to maintain their positions; if they were unable to, then they had to sell their shares—which, of course, caused prices to fall further.

Trading became so fast and furious that stock tickers (physical telegraph machines that reported share prices) couldn’t keep up, lagging behind by hours; confusion over the lack of up-to-date information encouraged the stampede to sell.

The Bottom Line

Black Thursday was the start of the Stock Market Crash of 1929 when panicked selling resulted in the Dow significantly dropping in value, and led the way for the Great Depression to follow. Black Thursday also resulted in a complete overhaul of the U.S. financial system, creating regulatory agencies such as the SEC and the implementation of other regulatory acts to protect investors.