Was There Ever a Market Crash on Good Friday?

4/1/2021

Markets

0 min read

The Real Reason the NYSE is Closed Good Friday

Three times a year, the NYSE’s holiday schedule differs from the U.S. Federal Government. Federal office closings usually dictate bank holidays as well. This happens on Columbus Day and Veterans Day; on these days, banks and the Federal Government are closed, the stock exchanges are open. Only on Good Friday is the market closed as Federal workers and bank employees have a regular workday. Interestingly, the Friday before Easter is the only non-federal holiday among the exchange’s nine annual holidays. Traders, stock market employees, and others associated with transacting for U.S. equity markets can keep their work computers off, receive USPS mail, run to the bank, and even chat by phone with the IRS.

Why This One Particular Day?

Wall Street is full of superstitions, sayings, and stories with varying degrees of truthiness. The granddaddy of exchanges, the New York Stock Exchange, has been closed the Friday before Easter for over 150 years. There have been three exceptions (1898, 1906, and 1907), and during these years it stayed open that Friday. There is an often-heard tale that has circulated, referring to this day as “Black Friday.” As this fake news story goes, the NYSE had once opened its doors on a Good Friday, which occurs on the holiest week of the year for Christians, and the stock market had a terrible crash. This “bad karma” caused those governing the NYSE to vow to never again allow trading on the exchange on Good Friday.

There is no record of anything that would fit the above narrative. Plus, it begs the question, “why isn’t the market closed for superstitious reasons on other days of horrific selloffs?” Maybe March 23^rd would be a wise day for those running the exchanges to consider guarding against the first week of Spring selloff in 2020.

Why there is no record? Because it never happened. Apparently, the story isn’t even Snopes-worthy because the only entries related to Good Friday or Black Friday respond to questions about Thanksgiving and resurrection, not market selloffs.

But I did find a story from what I deem to be a credible source or at least a wise codger that is believable on this question. Art Cashin, the recognizable NYSE floor trader for UBS, slapped down this myth in his daily emailed newsletter back in 2011. In short, he wrote, “it never happened.”

Text From Art Cashin’s 2011 UBS Newsletter

“In the over five decades that I’ve been in Wall Street, each
Easter season sees the re-blooming of an old — and erroneous — myth.

“That myth contends that the NYSE opened on a Good Friday
and the terrible Black Friday crash occurred. Thus, chastened and shaken, the
Governors vowed never to open on a Good Friday again. It never happened.

“Thanks to the nice folks in the NYSE archives we were able
to establish a few facts. Records clearly show the NYSE closed on Good Friday
as far back as 1864. Before 1864 records on the subject are a bit harder to
find but there is high likelihood that the Exchange closed on Good Friday all
the way back to 1793. (It was founded on May 17th, 1792 so Good Friday would
have already passed that year.)

“There was a famous and terrible Black Friday crash in Wall
Street but it was primarily in the gold market. It came about when the ‘corner’
on gold that
Jay Gould and Jim Fisk had constructed (with
some help from President Grant’s brother-in-law), collapsed. That occurred on
September 24th, 1869, a little late in the year for Good Friday. You will also
note from the search of the records that the NYSE was closing on Good Friday at
least five years earlier and probably, much, much longer.

“Lastly, for some unexplained reason, the NYSE stayed open
on three Good Fridays. On April 8, 1898, the Dow closed down a half point.
That’s hardly a crash. On the other two, April 13th, 1906 (a Friday the 13th)
and March 29th, 1907, the Dow actually rose.”

“I hope that puts the myth to bed.”

Two Last Points

Of the three years the market stayed open on Good Friday, two closed higher than they opened, and one (1898) closed lower.
If you’re off today or missing the excitement of trading, enjoy your long weekend, the market will be there for you on Monday.

Paul Hoffman

Managing Director, Channelchek

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