General Motors Company (GM), E I Du Pont De Nemours And Co (DD): Breaking the Link Between Two Dow (.DJI) Leaders

The rally was built on the government’s abandonment of antitrust efforts against the merger of two post-breakup companies of the former Standard Oil Trust, as well as the reduction of broker margin requirements to only 20%. Because excessive leverage became widely seen as a primary cause of the crash, it’s questionable why such a move should be so widely cheered — but traders have always enjoyed playing with other people’s money, and the availability of greater amounts of it for their own collateral was undoubtedly appealing.

Few investors were optimistic at this point, but a positive mood took hold as the day progressed, leading some traders to speculate that the crash was running its course. This speculation proved disastrously wrong. Despite its impressive gains, the Dow Jones Industrial Average (Dow Jones Indices:.DJI) still closed out the day exactly two-thirds below its 1929 peak. Difficult as it is to imagine, the index went on to lose slightly more than two-thirds more of its June 3, 1931 value before bottoming out the following summer.

The article Breaking the Link Between Two Dow Leaders originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.The Motley Fool recommends General Motors.

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