Dot-com bust, 1987 crash had massive relief rallies similar to Wednesday’s pop

Every bear market has days like this.

The Nasdaq soared 12% on Wednesday, the second-best day on record for the tech-heavy index and its sharpest rally since January 2001, which was the middle of the dot-com crash.

During the financial crisis in October 2008, the Nasdaq enjoyed two of its best five days ever. The other two came as the tech bubble was bursting. The index’s sixth-best day since its beginning in 1971 came on March 13, 2020, as the Covid pandemic was hitting the U.S.

Of the 25 best days for the Nasdaq, including Wednesday, 22 took place during the dot-com collapse, the 2008-09 financial crisis or the early days of Covid. One occurred on Oct. 21, 1987, two days after Black Monday. The other was in November 2022.

Call it a dead-cat bounce, a relief rally or short covering. It’s a familiar reaction during the worst of times for Wall Street.

Be prepared for plenty more volatility.

The worst month on record for the Nasdaq was October 1987, when the index plunged 27%. Second to that was a 23% drop in November 2000. In March 2020, the Nasdaq sank 10%. It’s still down 1% this month just after closing out its worst quarter since 2022.

President Donald Trump sparked the Wednesday bounce when he dropped new tariff rates on imports from most U.S. trade partners to 10% for 90 days to allow trade negotiations with those countries. The president’s social media post lifted optimism that levies would be less severe than expected and immediately boosted a market that’s been hammered since Trump rolled out his sweeping tariff plan last week.

Wealthy Trump donors and business leaders, including hedge fund manager Bill Ackman, Home Depot co-founder Ken Langone and billionaire investor Leon Cooperman have weighed in with hefty criticism of Trump’s tariffs. JPMorgan Chase CEO Jamie Dimon said earlier on Wednesday that the tariffs will likely lead to a recession, after BlackRock CEO Larry Fink said Monday at an event in New York that, “Most CEOs I talk to would say we are probably in a recession right now.”

Tesla CEO Elon Musk, the world’s richest person and one of Trump’s closest confidantes in the White House, spent the early part of this week slamming Peter Navarro, Trump’s top trade advisor, calling him a “moron” and “dumber than a sack of bricks.”

Musk’s electric vehicle company has gotten pummeled of late, tumbling 22% in the four prior trading sessions after suffering its worst quarter since 2022. The stock soared 23% on Wednesday, its second-best day on record.

The big difference between the current market tumult and the downturns in 1987, 2000-2001, 2008 and 2020 is that many investors say this one was easily avoidable and, potentially, can be reversed based on what the president decides to do.

“What Trump unveiled Wednesday is stupid, wrong, arrogantly extreme, ignorant trade-wise and addressing a non-problem with misguided tools,” investor Ken Fisher wrote in a post on X on Monday, referring to last week’s announcement. “Yet, as near as I can tell it will fade and fail and the fear is bigger than the problem, which from here is bullish.”

Trying to predict Trump’s next move is a fool’s errand.

On Sunday evening the president told reporters that he’s not trying to push the market down, “but sometimes you have to take medicine to fix something.” He stressed the importance of fixing the country’s trade deficit with China, and said “unless we solve that problem, I’m not going to make a deal.”

The president is keeping his hard line on China, at least for now. He said on Wednesday that he was raising the tariff on China higher, to 125%. All other countries would go back to the 10% baseline tariff rate as negotiations take place.

Prior to his latest pronouncement, economic fears had spilled into the bond market, raising concerns that higher interest rates would create further problems for consumers at the worst possible time. The 10-year Treasury note yield, which helps decide rates on mortgages, credit card debt and auto loans, spiked overnight to 4.51% after hitting 3.9% last week. It’s currently at 4.38%.

As the tech industry’s megacap companies, which make up an outsized portion of the Nasdaq and the S&P 500, prepare to report quarterly results starting late this month, management teams will be looking for some visibility that can guide forecasts for the rest of the year and into 2026.

In the absence of more clarity, many of their plans will likely be on hold as they figure out how much existing and expected tariffs will raise costs and hurt revenue, and what they need to do to shore up supply chains.

Wednesday provided some relief. Investors like Ackman are celebrating.

“This was brilliantly executed by @realDonaldTrump,” Ackman wrote on X. “Textbook, Art of the Deal.”

In a note, Wedbush analyst Dan Ives called it “the news we and everyone on the Street was waiting for” after the president’s “self-inflicted Armageddon.”

But for companies that are in the crosshairs of Trump’s wavering policy decisions, all the uncertainty remains.

WATCH: Trump’s 90-day pause