tion of Securities Dealers Automated Quotation Sys-
tem (NASDAQ)—had fallen between 18 and 24 per-
cent, as had the widely followed Dow transport and
Value Line indexes.
The New Bull Market With the resolution of the in-
ternational crisis, the stock market returned to its
upward climb. In 1991, the Dow rose above the 3,000
level for the first time in history. On January 3, 1995,
it hit 4,157. With the increase of the market and the
proliferation of initial public offerings (IPOs), pen-
sion funds, and financial news networks, investors
poured money into the stock market. Over the
course of the decade, the percentage of Americans
who owned stocks and mutual funds doubled to 46
percent. The number of mutual funds more than
doubled from 3,086 to 7,400.
On November 29, 1995, the Dow had its first close
above 5,000. Stock market mavens became national
celebrities: Michael Bloomberg for his financial in-
formation empire, Warren Buffett for the success of
his investment vehicle, Berkshire Hathaway. The
biggest financial celebrity of all was the chairman of
the U.S. Federal Reserve, Alan Greenspan, whose as-
tute management of interest rates was credited as
perhaps the key component in the decade-long bull
market. At a December 5, 1996, speech at the Ameri-
can Enterprise Institute, Greenspan voiced concern
over the “irrational exuberance” that had seemed to
overtake the stock market. Greenspan’s words hit
the news instantly. Within minutes, overseas markets
began plunging, with some, such as the Nikkei, fall-
ing over 3 percent by night’s end. When the U.S.
stock market opened the following morning, the
Dow fell over 2 percent in the first half hour. How-
ever, if stock prices were “irrationally exuberant,”
they would remain so for the rest of the decade.
Swiftly recovering from Greenspan’s remarks, the
stock market again resumed its upward climb. In
1998, the Dow surpassed 9,000. On March 29, 1999,
the Dow closed above the 10,000 level. On May 3,
1999, the Dow climbed over the 11,000 mark.
Internet Stocks The highest-flying stocks of the de-
cade were shares of the newly created Internet com-
panies, nicknamed “dot-coms.” With excitement
over the growth of the Internet, share prices of Inter-
net companies—and companies connected to the
Internet, and companies that stuck “.com” after
their names—soared, even if they had no profits to
report. In 1995, NASDAQ, the stock exchange that
listed most of the Internet and technology stocks,
was below 1,000. By decade end, it was approaching
5,000. As an example of the stock mania, Netscape
Communications Corporation began trading in
1995 at $28 a share; the price doubled the first day of
trading. By year end, it stood at $171.
Internet stock analysts Jack Grubman, Mary
Meeker, and Henry Blodget became financial news
celebrities, earning tens of millions of dollars for
predicting an endless rise in dot-com share prices.
But the strength and duration of the U.S. bull mar-
ket was not shared worldwide. In 1997 and 1998, the
currencies of southeast Asia collapsed, Argentina
was approaching bankruptcy, and Russia and East-
ern Europe struggled with the transition to market
economies, with resulting convulsions to their stock
markets. The Japanese market, near an all-time high
at the beginning of the 1990’s, had dropped almost
two-thirds over the course of the decade, with the
Nikkei 225 falling to 13,564 in October, 1998.
Impact The great bull market of the 1990’s symbol-
ized the success of the U.S. economy and contrib-
uted to both the 1996 reappointment of Alan
Greenspan as chairman of the Federal Reserve and
the reelection of Bill Clinton as president. Likewise,
the astonishing surge in the prices of dot-com shares
presaged the explosive growth of the Internet and
the World Wide Web in modern society. However
with the 60 percent plunge of the NASDAQ and
bankruptcy of many dot-com companies from
March, 2000, to March, 2001—representing a stag-
gering $4.5 trillion loss in the U.S. stock market—
the frenetic final years of the 1990’s bull market has
been labeled a stock market bubble.
Further Reading
Gasparino, Charles.Blood on the Street: The Sensational
Inside Stor y of How Wall Street Analysts Duped a Gen-
eration of Investors. New York: Free Press, 2005.
Exposé of the Wall Street analysts who fueled the
Wall Street and stock market bubble of the late
1990’s.
Gross, Daniel.Bull Run: Wall Street, the Democrats, and
the New Politics of Personal Finance. New York:
PublicAffairs, 2000. Convincingly argues that the
1990’s saw the “democratization” of Wall Street
through an expanding stockholder population.
Sicilia, David, and Jeffrey Cruikshank.The Greenspan
Effect. New York: McGraw-Hill, 2000. Describes
Greenspan’s enormous influence over the econ-812 Stock market The Nineties in America