Wednesday's Stock Market Mini-Crash Looked Different From Past Pullbacks. Here's How

The stock market really built up downward momentum on Wednesday, adding to losses earlier in the week as market participants continued to look warily at rising COVID-19 case counts in the U.S. and Europe. Investors are also trying to anticipate the potential fallout from next Tuesday's presidential election and the impact on long-term investment strategies. The Dow Jones Industrials (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) all dropped sharply from the open and finished the day down between 3% and 4%.

Today's stock market


Percentage Change

Point Change




S&P 500



Nasdaq Composite



Data source: Yahoo! Finance.

Most investors have gotten used to extreme volatility in 2020, as big gains have followed big losses and vice versa throughout most of the year. However, there was something about today's downward move -- termed a "mini-crash" by some commentators -- that looked different from what market participants have seen this year. A big part of it had to do with the uniformity of the move lower, as this downturn took no prisoners and left few stocks unscathed.

A uniform move lower across the board

Looking at the table above, you can see that the three major market benchmarks all moved more or less in lockstep. It wasn't a case in which the Nasdaq rose while the Dow plunged, or the S&P soared while the Nasdaq lost ground. The mood seemed equally dour across the entire market.

Person looking at wall with lots of downward pointing arrows.

Image source: Getty Images.

You can see that feeling persist even when you go beyond the large-cap stocks that play the biggest roles in the Dow, S&P, and Nasdaq. The Russell 2000 benchmark of small-cap stocks was down almost 3%. Mid-cap stocks in the S&P MidCap 400 were down almost 3% as well.

Even when you go beyond the U.S., international stock market losses were similar. Stocks from the biggest countries represented in the MSCI EAFE Index fell nearly 3%, while emerging markets stocks were down roughly 2.5%.

Defensive plays also fail

It was even difficult to find shelter in some perceived safe-haven investments. Gold prices fell $35 per ounce to $1,877, or nearly 2%. Silver plunged almost 5%, with other precious metals also seeing losses.

Elsewhere in the commodities sector, crude oil prices were down almost 6%, falling more than $2 per barrel to just over $37. The threat of further lockdowns that could depress energy use raised fears of another disruption to energy markets similar to what happened this spring, when oil prices briefly went negative on futures exchanges.

Among newer investments, cryptocurrencies came under pressure as well. Bitcoin dropped roughly $600 from early morning highs, dipping below the $13,000 mark briefly before bouncing back. For those fearing systemic risks, bitcoin has been a big favorite, but that didn't work today either.

Even bond prices were down on the day, with the 10-year Treasury bond's yield rising slightly. Ordinarily, a big plunge in stocks would cause bond prices to spike, but that didn't happen this time.

Let the buyer of everything beware -- for now

In times of great uncertainty, you can't necessarily count on asset prices staying high in any sector of the financial markets. Today's move lower in just about every corner of the investing universe suggests that the big bull market of the past seven months might have gotten a little bit overly exuberant. That doesn't mean that a huge crash is coming, but it does explain why there weren't the usual places to hide during Wednesday's downdraft.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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