50 years ago today, President John F. Kennedy was assassinated.
At the time, there was no Twitter or Instagram or Bloomberg terminal to instantaneously circulate news like today.
So, traders on the New York Stock Exchange didn’t find out about the news until long after the event happened.
However, traders began dumping stocks before the news crossed the wires.
Veteran trader Art Cashin explains in his note this morning:
On the floor of the NYSE selling had begun before any headlines hit the tape. Months later I learned that was thanks to a savvy branch manager in Dallas.
Since Presidents didn’t travel widely in 1963, he thought he would give much of the staff a treat by letting them go out and watch the Presidential parade. He kept a skeleton crew and sent the others out to watch the parade, which was due to pass about a block away.
Rather shortly the gang wandered back in looking somewhat glum and disappointed. “What happened”?, asked the manager. “Parade got canceled” mumbled one of the returnees.
After questioning, he learned that they had heard the sirens accelerate, the police lights flare and the “parade” suddenly turn right. They were many blocks away and obviously heard no shots.
The savvy manager quickly asked — “Give me a bullish reason to pull a President out of a parade?” “It’s not to sign a tax bill — that could wait.” No one could think of a bullish reason to divert a parade. Then they mulled bearish reasons. No one thought assassination. But they did think natural disaster, nuclear accident, missile threat and scores of others. That’s when they decided something “bad” must have happened and began to sell.
As their sell orders poured onto the floor and prices began to melt, they were asked by brokers — “Why the selling?” The response was the incomplete — “something about the President.”
Sometime later, the first headline hit — “Shots reported fired at President’s motorcade!” The selling broadened an accelerated. Rather quickly the next headline — “President reported hit.”
Exchange leaders hastily gathered and discussed closing the Exchange. Then the headline “Motorcade diverted to Parkland Hospital.” They rang the bell at 2:07 (EST).
The Dow fell the equivalent of what would be 460 points today. When we reopened Tuesday, there was such a sigh of relief that power had been transferred and the Constitution still functioned, that a massive rally erupted, soaring the equivalent of 710 points. An unforgettable period.
As bad as the actual news was, the sell-off and subsequent rally shows how negatively the imagination will run when there is a lack of information.
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