Overzealous management burned through money in efforts to grow their businesses and take them public.įurther down the chain were retail investors, who were looking for hot stocks to invest in. Venture capitalists poured millions of dollars into Internet companies that might have been founded on decent ideas, but had no proven business strategy, and-in most cases-were losing money fast. The Internet was in its infancy but, by all accounts, the potential for growth was unlimited. Investors, looking for new ways to make money, focused their attention on Internet stocks. The S&P 500 had entered 1990 at 353.40 and, by March 10, 2000, it had soared by a more modest 300% to 1413.38.ĭuring the second half of the 1990s, stocks soared and the Federal Reserve’s key lending rate hovered above five percent. By March 20, 2000, the day the NASDAQ peaked during the dotcom craze, the index had soared 1035% to a record intra-day high of 5132. On the first day of trading in January 2000, the tech-heavy NASDAQ was at 452. economy, so if the economy is doing well, earnings are up, and so too are stock valuations. After all, stocks are a barometer on the health of the U.S. GDP was -0.07 but, by 1999, it was 4.68.Īs one might expect, the stock market followed a similar trajectory. Gross domestic product (GDP) growth in the 1990s might have averaged just 3.3%, but it was a decade marked by serious expansion. In general, the 1990s were one of the best periods of growth in the United States.
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