By the end of Black Monday, as it came to be known, the Dow was down 36 percent from the record it had set just two months before.
—RECORD BREAKER: August 24, 1989. The Dow breaks the record held since 1987, closing at 2,734.64.
—RISE CONTINUES: It keeps rising for almost a year, gains 10 percent and peaks at 2,999.75 on July 16, 1990.
The Dow recovered quickly from its Black Monday in 1987.
The Federal Reserve reassured investors by immediately cutting interest rates, a move meant to spur borrowing and lending, and declaring that it was ready "to support the economic and financial system." Reagan insisted the economy was fundamentally sound. Soon enough, investors began to think of the one-day panic as a sign of scared stock traders and unwieldy computer trading, rather than an indictment of the broader economy.
Through 1988 and 1989, the economy kept expanding and unemployment stayed low. On Aug. 24, 1989, the Dow was up 57 percent from its Black Monday disaster and broke its August 1987 record.
It kept rising for almost a year. In the summer of 1990, it came agonizingly close to a 3,000 close, ending at 2,999.75 on both July 16 and 17. On the second day, traders at the New York Stock Exchange tossed paper in the air in celebration at the end of the day— then realized, when the final figures were tallied, that the celebration was premature.
That same day, Saddam Hussein warned that Iraq would retaliate against other oil-exporting countries unless they curbed their production. Two weeks later, Iraq invaded Kuwait. Oil prices surged.
As the Gulf War ramped up, the Dow entered a brief bear market from July to October 1990, falling 21 percent.
—RECORD BREAKER: April 17, 1991. The Dow breaks the record held since 1990, closing at 3,004.46.
—RISE CONTINUES: It keeps rising for almost nine years, gains 290 percent and peaks at 11,722.98 on Jan. 14, 2000.
In October 1990, a new bull run began, one that would last through 2000. Its length was second only to the bull market that spanned the 1950s.
An early milestone of this bull run happened on April 17, 1991: The Dow reached 3,004.46, passing its July 1990 high and posting its first close above 3,000.
The index was up 27 percent from its October 1990 low during the Gulf War.
New technology like email, cell phones and, especially, personal computers, fueled a new era in workplace productivity. The Soviet Union dissolved in 1991, an encouragement to American investors. The Dow took off, and when there were unsettling developments in other parts of the world, like the Asian financial crisis in 1997 and crises in Russia and Brazil the following year, it kept rising anyway. The index cracked the 10,000 milestone in March 1999, and 11,000 barely a month later.
On Jan. 13, 2000, President Bill Clinton visited the New York Stock Exchange and told traders that he liked the way the market was looking. The next day, the Dow hit another record, 11,722.98.
The Dow started to fall the next trading day. The bubble made by technology stocks soon burst. The 9/11 terrorist attacks, uncertainty about the wars that would follow, and accounting scandals at companies like Enron, WorldCom and Tyco left investors shell-shocked.
By Oct. 9, 2002, the Dow had fallen to 7,286.27, down 38 percent from the 2000 record.
— RECORD BREAKER: Oct. 3, 2006. The Dow breaks the record held since 2000, closing at 11,727.34.
— 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.
—RECORD BREAKER: March 5, 2013. The Dow breaks the record held since 2007, closing at 14,253.77.
By now, the cold fear of the financial crisis has receded, even if its effects linger. The recession has been over, technically anyway, for nearly four years.
Unemployment, if still high, is falling. The economy, while growing slowly, at least isn't shrinking. Inflation is still low.
The Dow record doesn't necessarily mean that investors believe the economy is fully healed. Rather, they're confident that the Fed is willing to keep pumping money into it. They've learned to ignore budget fights in Washington.
It's impossible to predict how long the bull run could continue. But so far, there aren't all the tell-tale signs that it's about to run out.