Benzinga - Benzinga takes a look back at a notable market-related moment that occurred on this date.
What Happened? On Feb. 3, 1929, National City Bank of New York announced it would be lending $25 million to stock market speculators.
Where Was The Market? The S&P 500 was trading at around 25 and the Dow Jones Industrial Average was at 317.
What Else Was Going On In The World? In 1929, seven of Al Capone’s rival gangsters were murdered in the streets of Chicago in the St. Valentine’s Day Massacre. The Museum of Modern Art opened in New York City. A loaf of bread cost 10 cents.
Market Speculation Reaches Fever Pitch: One day after the U.S. Federal Reserve attempted to slow down what it saw as an overheating stock market by banning loans to stock market speculators, National City Bank of New York blatantly defied the Fed and announced it would be making $25 million in loans to stock market speculators.
The stock market buying frenzy would continue for another six months. The Dow had traded under 68 as recently as 1921, but it made it to above 317 by February 1929. The Dow would continue to rise, ultimately peaking at 381.17 on Sept. 23, 1929. The subsequent market crash triggered the Great Depression, and the Dow wouldn’t make another new all-time high again until 1954.
It wouldn’t be the last time National City Bank of New York played a role in a market mania that created systemic risk for investors. In 2008, the bank, which is now known as Citigroup Inc (NYSE: C), was at the epicenter of the mortgage crisis that triggered the 2008 stock market crash.
Photo: New York, corner between Wall Street and William Street 1798.
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