In a moment that sent chills down the spines of many investors, Tesla Inc and SpaceX CEO Elon Musk drew a parallel between the current market conditions and the infamous 1929 stock market crash. On March 15, 2023, amid a series of bank failures that shook the financial sector, Musk tweeted, “Lot of current year similarities to 1929.” This ominous comparison to one of the darkest chapters in economic history came in response to a now-unavailable post by Ark Invest CEO Cathie Wood, known for her bullish stance on disruptive technologies.
Musk’s tweet coincided with the collapse of Silicon Valley Bank (SVB), Signature Bank, and Silvergate Capital, events that briefly paralyzed financial markets and evoked memories of the 2008 financial crisis. The turmoil led to significant market value losses for banking giants like JPMorgan Chase and Bank of America, though they later rebounded following swift regulatory intervention.
The 1929 reference was particularly chilling for those familiar with financial history. The stock market crash of that year, infamously known as Black Tuesday or the Great Crash, triggered the Great Depression, an economic catastrophe unparalleled in modern times. During that fateful October, the Dow Jones Industrial Average plummeted 23% in just two days, setting the stage for a decade of economic hardship.
While Musk didn’t elaborate on the specific similarities he observed between 1929 and the current market, Wood had previously suggested that the rise of cryptocurrencies like Bitcoin and Ethereum had led to the first decline in bank deposit levels since the Roaring Twenties. The observation hinted at potential systemic risks lurking beneath the surface of the financial system.
However, contrary to these gloomy forecasts, the S&P 500 has demonstrated remarkable resilience. According to data from Benzinga Pro, the index closed at 5,745.37 on Thursday, representing a staggering 47.62% increase from its level of 3,891.93 on the day of Musk’s tweet. This significant rally has seemingly brushed aside the concerns that Musk’s ominous comparison raised.
The market’s performance raises questions about the validity of comparing today’s economic landscape to the events of 1929. While the recent bank failures have highlighted vulnerabilities in the financial system, the swift intervention by regulators and the overall strength of the economy have so far prevented a full-blown crisis. The S&P 500’s impressive climb suggests that the market has a degree of optimism and resilience that may not have been anticipated by those who saw parallels to the Great Depression.
