PepsiCo, Inc. (PEP), Accenture Plc (ACN): A Day of Accounting Scandals and Irrational Market Exuberance

The Dow was close to four digits when the play opened, finishing at nearly 900 points after its first performance. There wasn’t a lot of movement from the first performance to the last, as the Dow ended up at 913 points when How Now, Dow Jones bowed on June 15. What seemed so close turned out to be far away indeed — after peaking at 985 points later that year, the Dow began a long and erratic slide into the stagflationary 70s. It did peak over 1,000 points just over four years after the play ended, but the four-digit barrier proved very porous during the ensuing years. It wasn’t until 1982 that the Dow would finally put 1,000 points in its rearview mirror for good. If the fictional marriage hoped for in this play was built on an expectation of high Dow values, it probably had quite a rocky time during the 1970s.

Trading without a floor
New York’s curb exchange (roughly equivalent to today’s over-the-counter exchanges) surpassed the New York Stock Exchange — now part of NYSE Euronext (NYSE:NYX) — in volume for the first time ever on June 15, 1929. The curb saw 1.287 million shares exchange hands, compared with 1.264 million on the NYSE trading floor. This was particularly notable, because year-to-date volume for the curb exchange had been roughly a third of the NYSE, on account of lower interest in the steady public utility stocks often traded there.

The ramping up of interest in shares on less-regulated exchanges occurred just as the market as a whole entered the final, frenzied race to its 1929 peak. Two and a half months later, the Dow would top out 22% higher than its close on June 15, before beginning a slide into the worst crash in stock market history. Five years later, President Franklin D. Roosevelt began cracking down on the curb exchanges with the creation of the SEC, ensuring that the major exchanges would always be the first choice for listing or trading the shares of reputable companies.

The article A Day of Accounting Scandals and Irrational Market Exuberance 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 Accenture Plc (NYSE:ACN), NYSE Euronext (NYSE:NYX), and PepsiCo. The Motley Fool owns shares of PepsiCo, Inc. (NYSE:PEP).

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