By Oct. 9, 2002, the Dow had fallen to 7,286.27, down 38 percent from the 2000 record.
â¿¿ RECORD BREAKER: Oct. 3, 2006. The Dow breaks the record held since 2000, closing at 11,727.34.
â¿¿ RISE CONTINUES: It keeps rising for another year, gains 21 percent and peaks at 14,164.53 on Oct. 9, 2007.
In October 2002, the Dow started another bull run. The market had gotten over the tech bubble bursting and was being fueled by an overexpansion of another sort, in the housing market. Low interest rates and easy access to credit enticed borrowers to buy homes they couldn't afford. Banks and other lenders repackaged the mortgage loans into securities and dumped them on investors, freeing themselves up to make even more loans. Speculative buyers also helped push home prices unsustainably higher.
On Oct. 3, 2006, the Dow broke its 2000 record and closed at 11,727.34, up 61 percent from its October 2002 low.
It kept rising for another year, finally hitting 14,164.53 on Oct. 9, 2007. But by then, hints of the financial crisis were emerging. The Fed was already cutting interest rates, a sign that it was worried about the economy. Home prices were cooling. Subprime mortgage giant New Century had collapsed that spring. Citigroup CEO Chuck Prince was a month away from losing his job.
By fall 2008, the financial crisis was obvious. Wachovia, Washington Mutual and Merrill Lynch were pushed into rescue mergers with other banks, Lehman Brothers collapsed, and mortgage lenders Fannie Mae and Freddie Mac were basically taken over by the government.
The panic deepened. On March 9, 2009, as rumors flew that the banking industry would be seized by the government, the Dow fell to 6,547.05, down 54 percent from its 2007 record.
â¿¿RECORD BREAKER: March 5, 2013. The Dow breaks the record held since 2007, closing at 14,253.77.