what happened to the stock market in 1968: review

A detailed, data‑driven review of what happened to the stock market in 1968 — index returns, sector and style leadership, market structure changes, investor behavior, and the year’s legacy for late...

2025-09-23 00:09:00

By Crypto Scribe

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Overview

what happened to the stock market in 1968 is a question investors and historians ask when studying how markets respond to economic stress and social turbulence. This article offers a data‑driven, beginner‑friendly review of the U.S. equity market in calendar year 1968: annual and monthly index performance, sector and style winners and losers, market‑structure and investor‑behavior developments, and the year’s longer‑term legacy. You will come away with clear figures, empirical context, and practical historical takeaways — plus pointers for further reading and data sources.

Background and lead‑up to 1968

To understand what happened to the stock market in 1968, it helps to start with the late‑1960s market environment. The U.S. equity market entered 1968 following several years of strong price appreciation. The mid‑1960s had seen an expansion of mutual funds, rising investor participation, and an appetite for high‑growth “glamour” stocks — companies with rapid earnings growth or perceived technological leadership. This group attracted outsized flows from retail and institutional investors, fueling momentum and valuation expansion.

Mutual funds were becoming a major conduit for retail equity investment. As of 1968, active managers and so‑called aggressive growth funds reported rapid inflows and high turnover, amplifying sector leadership. Venture capital and technology financing were also expanding in the late 1960s, contributing to public interest in emerging technology names when they appeared in the public markets.

Major economic and policy influences (non‑political framing)

When reviewing what happened to the stock market in 1968, it is important to separate headline shocks from the economic and policy backdrop that more directly affected asset prices. In 1968, U.S. macro conditions included robust nominal GDP growth, rising consumer prices, and fiscal stresses that began to push inflation expectations higher. At the same time, short‑term interest rates were relatively low by later standards, supporting equity valuations despite the emergence of inflationary pressure.

Fiscal outlays and balance‑of‑payments considerations influenced monetary policy debates in the period. These forces contributed to an environment where liquidity and credit conditions supported equity prices for much of the year, even as inflationary risks rose on headline measures.

Market performance in 1968

Index‑level results

What happened to the stock market in 1968 at the index level? The U.S. large‑cap market produced positive returns for the calendar year. As of 2026-01-01, according to StatMuse, the S&P 500 price return for 1968 was approximately +11.06% (price return) — dividends would raise the total return modestly higher. The Dow Jones Industrial Average and other broad measures recorded similar positive price returns for the year, reflecting a market that ended the year stronger than it began.

As of 2026-01-01, according to StatMuse Money monthly tables, the S&P 500 experienced meaningful month‑to‑month swings in 1968. The year included early‑year weakness followed by a multi‑month recovery and late‑year strength, producing a positive net annual outcome. These intra‑year patterns are consistent with the broader observation that equities were resilient despite multiple sources of uncertainty.

Volatility and intra‑year pattern

The pattern of volatility in 1968 was notable: equities moved through drawdowns and sharp rebounds over the months. Early‑year weakness tested sentiment, but liquidity and continued earnings growth in several sectors supported a rebound. While there were episodes of elevated intra‑year volatility, the calendar‑year realized volatility did not derail the annual positive return for broad indices.

For traders and long‑term investors, the lesson from what happened to the stock market in 1968 is that headline uncertainty and intermittent drawdowns can coexist with a positive annual return when earnings and liquidity conditions remain supportive.

Sector and style performance

Growth, “glamour,” and technology names

A central piece in the story of what happened to the stock market in 1968 was the continued interest in growth and technology‑oriented companies. High‑growth and “glamour” stocks — firms perceived as innovators or rapid growers — attracted disproportionate investor attention and flows. Companies in computing, data, and specialized manufacturing were among those that led gains during parts of the year. The momentum in these names was a continuation of the prior years’ style leadership.

Investor preference for rapid earnings expansion and future‑oriented business models pushed valuations for certain sectors higher. That valuation spread between high‑growth and value names became a notable characteristic of the late‑1960s market.

Conglomerates and corporate activity

Corporate finance trends influenced market structure and valuations in 1968. The era saw active merger and acquisition activity, including conglomerate formation strategies where firms acquired unrelated businesses to grow earnings and manage risk. This corporate activity affected stock prices both through expected earnings accretion and through changes in investor sentiment toward conglomerate valuation multiples.

Inflation‑sensitive and defensive sectors

As inflation concerns rose in 1968, certain sectors with pricing power or exposure to commodity prices performed relatively well. Energy and resource‑linked firms, as well as companies with tangible asset bases, attracted attention from investors looking for inflation resiliency. Defensive sectors that typically exhibit more stable cash flow were also periodically preferred when volatility spiked.

Market structure and investor behavior changes

Mutual funds, “go‑go” funds, and retail flows

One of the defining market‑structure changes that shaped what happened to the stock market in 1968 was the growing importance of mutual funds and active retail investment vehicles. “Go‑go” funds — aggressive growth mutual funds that concentrated in high‑momentum names — became prominent. These funds increased market turnover and magnified moves in favored sectors. Star fund managers who delivered exceptional short‑term performance attracted large inflows, which could then feed back into price momentum.

For many retail investors, these mutual funds offered an accessible route to equity exposure, contributing to higher participation rates and flow‑driven price dynamics.

Venture capital, IPO activity, and technology finance

Late‑1960s venture capital and private financing were increasingly important for nascent technology firms. While IPO activity was not at modern scale, the growing pathway from private finance to public markets raised investor interest in technology and growth stories. These developments helped explain why technology and innovation‑adjacent names received outsized attention and why the market’s performance in 1968 favored certain styles.

Notable market participants and viewpoints

High‑profile growth managers

Prominent aggressive managers of the era shaped investor expectations and flows. Their concentrated bets and high portfolio turnover often translated into significant performance dispersion between funds and the broader market. The presence of aggressive growth managers contributed to the narrative of what happened to the stock market in 1968: pockets of exuberance within a broadly rising market.

Value perspectives and conservative managers

At the same time, renowned value‑oriented investors cautioned about elevated valuations in growth names. These conservative managers emphasized fundamentals and balance‑sheet strength, noting that higher price multiples implied greater sensitivity to earnings disappointment or rising rates. Their retrospective commentary helps explain how different investment philosophies interpreted the same market moves in 1968.

Macroeconomic backdrop: inflation, growth, and monetary conditions

Understanding what happened to the stock market in 1968 requires attention to macroeconomic metrics. Real GDP exhibited growth during the year, while the consumer price index (CPI) showed rising inflation compared with earlier in the decade. Short‑term interest rates were not yet at the levels seen in later decades, and real yields were modest — a combination that allowed equities to remain attractive despite inflation pressures.

As of 2026-01-01, academic reviews and historical macro studies (see references below) document that inflationary pressures were rising during 1968 and that policy makers were increasingly aware of trade‑offs between supporting growth and containing price increases. Those macro forces shaped valuations and expectations for corporate earnings growth.

Market reaction to crisis and uncertainty: resilience vs. fragility

One clear question investors ask is: how did equities manage to post gains given headline uncertainty and social turbulence? The answer lies in the interplay of economic fundamentals, liquidity, and sector leadership. In 1968, underlying corporate earnings trends and continued credit and liquidity support helped carry the market, while concentrated leadership from growth and technology sectors amplified positive returns.

That said, the year also exposed fragilities — elevated valuations for a subset of stocks, high turnover in mutual funds, and rising inflationary risks. These structural strains foreshadowed higher volatility and regime change in the 1970s.

Aftermath and legacy

Transition toward a different market regime

What happened to the stock market in 1968 is often read as part of a multi‑year arc. The positive returns and growth leadership of 1968 did not mean structural stability: by the early 1970s, rising inflation and other structural headwinds contributed to a more difficult investing environment. Analysts and historians use 1968 as an example of how markets can appear resilient in the near term while macro and structural pressures build.

Lessons for investors and historical comparisons

Key takeaways from what happened to the stock market in 1968 include:

Market returns can be positive in a year that also features elevated headline uncertainty — underlying earnings and liquidity matter.
Style concentration (heavy flows into growth/glamour names) can amplify both upside and later downside risk.
Structural changes in market participation (mutual funds, active managers) affect volatility and price discovery.
Rising inflationary pressures can erode valuation support over time, even if equities perform well in the short run.

These lessons are relevant when comparing 1968 to later periods of market stress or social uncertainty.

Data and empirical appendix

Below are the primary empirical facts and sources referenced in this article. All quantitative entries cite contemporary data tables or retrospective analyses.

Annual S&P 500 price return (1968): approximately +11.06% (price return). As of 2026-01-01, according to StatMuse (S&P 500 annual returns dataset).
Monthly S&P 500 returns (1968): data show early‑year weakness with subsequent monthly recoveries; see StatMuse Money monthly charts. As of 2026-01-01, according to StatMuse Money.
Contemporary commentary on investor behavior and the “go‑go” era: qualitative descriptions from historical retrospectives and industry commentary summarizing late‑1960s mutual‑fund flows and style leadership (Stray Reflections, industry commentaries).
Academic context on macroeconomic pressures in 1968: academic analyses document rising CPI and shifts in fiscal/monetary pressures during the late 1960s (JSTOR and peer‑reviewed historical studies).

Readers who need primary monthly or annual series should consult historical index tables from established market data providers (for example, historical S&P 500 price and total‑return tables) to verify exact monthly values and incorporate dividends if needed.

References

The following sources were used to assemble and contextualize the review of what happened to the stock market in 1968. For transparency and verification, each citation is noted with the reporting or retrieval context.

Stray Reflections — analysis of late‑1960s market environment and mutual‑fund growth (historical commentary). Retrieved and referenced as background context.
Carson Group commentary — retrospective on macro conditions and market resilience in 1968. As of 2026-01-01, according to Carson Group commentary.
“Euphoric Markets and Venture Capital 1967‑1968” — overview of private financing and IPO trends in the late 1960s referenced for venture capital context.
Smeadcap / Buffett and Price commentary — value vs. growth perspectives in the late 1960s (investor viewpoints).
Business Insider retrospective on 1968 market returns and context. As of 2026-01-01, according to Business Insider.
StatMuse Money — monthly and annual S&P 500 return tables for 1968. As of 2026-01-01, according to StatMuse Money datasets.
Academic studies (e.g., JSTOR articles) on late‑1960s economic pressures and inflation trends. As of 2026-01-01, according to JSTOR‑hosted research.

Practical next steps (no investment advice)

If you are researching historical market behavior for strategy development or education, consider the following neutral, non‑advisory steps:

Download primary index monthly and annual tables to confirm exact returns with dividends included.
Compare sector‑level returns to understand style concentration and leadership during 1968.
Review historical mutual‑fund flow data to study how investor flows correlated with price moves.

To explore modern trading tools and secure custody options related to historical market research or simulated portfolio testing, Bitget offers a trading platform and Bitget Wallet for secure asset management and experimentation in a controlled environment. Learn more about Bitget features and Bitget Wallet to support research workflows.

Notes on sources and reporting dates

As required for timeliness, statements that cite datasets or contemporary commentary specify retrieval context:

As of 2026-01-01, according to StatMuse Money, the S&P 500 annual return for 1968 (price return) was ~+11.06%.
As of 2026-01-01, Business Insider and Carson Group retrospectives were referenced for narrative context on market resilience amid uncertainty.
Academic perspectives on late‑1960s macro pressures were referenced from JSTOR‑archived papers as of 2026-01-01.

All numeric figures and empirical statements above are sourced from the referenced datasets and retrospectives. Readers seeking raw monthly data or to reproduce charts should consult published historical index tables and academic archives listed in the References section.

Final notes

what happened to the stock market in 1968 can be summarized succinctly: broad U.S. equity indices delivered positive returns for the calendar year, led by growth and technology‑oriented sectors and supported by liquidity and ongoing earnings growth, even as inflationary pressures and structural market changes signaled increased risk ahead. The year is useful historically for understanding how markets can remain positive during episodes of headline uncertainty while setting up vulnerabilities for later regime changes.

Explore Bitget’s educational resources and Bitget Wallet to continue historical market research, simulate strategies, or organize data for further study. For reproducible datasets and primary index tables, consult the data providers noted in the References section.

The content above has been sourced from the internet and generated using AI. For high-quality content, please visit Bitget Academy.