Dow Diary -- A Weekly Look at the Average in Its 100th Year --- Dow Jones Industrial Average -- The Next Century: When Saddam Uncaged a Bear
Who's afraid of Saddam Hussein?</br></br>The stock market was, in 1990. Iraq's invasion of Kuwait, and concern about the Iraqi leader's unpredictable behavior, helped spark a 21% decline in the Dow Jones Industrial Average.</br></br>The Saddam Hussein bear market began six years ago this month. Although unusually swift, the decline met the classic definition of a bear market: a 20% decline in major stock indexes.</br></br>The average had been knocking on the door of the 3000 mark that summer. It stopped a fraction of a point away, with twin peaks of 2999.75 on July 16 and July 17. Then, prices began to slide, ending with an Oct. 11 low of 2365.10.</br></br>Iraq invaded Kuwait Aug. 2, and much of the damage in the stock market took place in mid-August, after President Bush had said the invasion "cannot stand," but before it was clear what America would do. Fear that the U.S. might get involved in a prolonged war, or that Mr. Hussein might deploy chemical or biological weapons, helped to spook stocks. As it turned out, the war was quick and resulted in an overwhelming U.S. victory. On Jan. 17, 1991, after hostilities actually began and the results looked good for U.S. forces, the Dow industrials soared 114 points.