The Myth of Good Friday Close
The Stock Markets Have Only Been Open for 3 Easter Fridays Since 1792!
Why Are Stock Markets Closed on this Particular Day?
April 9, 2012
The New York Stock Exchange observes nine holidays each year. Many, such as Christmas Day and Thanksgiving, are recognized by other financial institutions and the federal government. But the NYSE is also closed on Good Friday, when many financial institutions and government offices are open. The reasons behind the closing have prompted some great theories which are discussed below.
The History of the Market Close for Good Friday
Records, from the NYSE archives, clearly show that the NYSE closed on Easter Friday as far back as 1864. Before 1864 records on the subject are a bit harder to find but there is high likelihood that the Exchange closed on Easter Friday all the way back to 1793. (The NYSE Exchange was founded on May 17th, 1792, so Good Friday would have already passed that year.)
The Theories and Speculations Abound
There are so many theories as to why the markets are closed on Good Friday and it is doubted that there is anyone who really knows exactly why!
Anyway, here are some of those theories and speculations that have been discussed and accumulated over the many years of the market existence:-
• The Myth Of The Crash That Caused The Stock Market To Close On Easter Friday – Bad Mojo!
The myth contends that the NYSE opened on a Good Friday and the terrible Black Friday crash occurred. Thus, chastened and shaken, the Governors vowed never to open on a Easter Friday again. It never happened.
There was definitely a famous and terrible Black Friday crash in Wall Street but it was primarily in the gold market. It came about when the “corner” on gold that Jay Gould and Jim Fisk had constructed (with some help from President Grant’s brother-in-law), collapsed. That occurred on September 24th, 1869, a little late in the year for Good Friday. It is also noted from the search of the records that the NYSE was closing on Easter Friday at least five years earlier and probably, much, much longer.
Another panic of 1907, related to Easter Friday, was triggered by a huge sell-off on Good Friday, which prompted NYSE officials to close the markets on that date ever since. The only problem in regard to this theory was that the panic actually started in October, not the spring.
• Religion and a Holiday Schedule
Good Friday is primarily a Christian holiday that marks the biblical story of the crucifixion of Jesus Christ.
Foreign markets, especially in Europe, take several days off around Easter, as well. Stock exchanges are closed there and that affects the volume of transactions in the US. Without much going on in Europe, the US could take the day off too.
However, Europe has their own holiday schedule that doesn’t line up with the U.S. holidays -- in the US markets are closed on days like Washington’s Birthday, Independence Day, and Labor Day -- these are holidays not celebrated in Europe.
Therefore, as an example, the London Stock Exchange is closed on Monday to celebrate Easter. The NYSE is not. Holiday scheduling for co-coordinating purposes does not seem like the solution.
• A Religious Deal
It also usually coincides with the Jewish holiday of Passover. Many believe that the NYSE observes the holiday because of the confluence of those two religious commemorations. The theory that Christian and Jewish traders agreed to take a day off around their important religious holidays in the spring — Easter and Passover, respectively — and settled on Easter Friday for its proximity to both.
Therefore, the day off with an "inter-confessional" deal between Christians and Jews makes sense, given the proximity of Good Friday and Passover, but there is absolutely no information to back up that assertion.
The NYSE is very traditional; they refer to Presidents’ Day as Washington’s Birthday instead. They’ve taken almost every Easter Friday off since the 19th century and it’s likely a lot more people celebrated Easter back then.
• Trade Volume
Some theorize that because the European markets are closed for Easter, it makes little sense for U.S. markets to be open because the trading volume is much lower than normal days.
It likely came from a lack of demand for trading on what was a high holiday in the exchange’s early days -- there was likely insufficient demand for trading on a day like Easter Friday, with so many traders at church.
• Leasing Deal
The NYSE had a favorable lease for its property in Manhattan, but the terms require the building to be closed on major Christian holidays, including Easter Friday.
However, this theory suffers from the fact that the NYSE has moved several times in its history, likely not bringing archaic lease agreements with it. Besides that factor, NYSE Group owns 11 Wall Street anyway and doesn't lease this building!
Actual Open Markets on Good Friday
Lastly, for some unexplained reason, the NYSE stayed open on three Easter Fridays. On April 8, 1898, the Dow closed down a half point – which certainly does not signify a crash. On the other two, April 13th, 1906 (a Friday the 13th) and March 29th, 1907, the Dow actually rose.
There are other theories as well, but they all tie back to weak trading volume on the day so the exchange just closes every year.
None of these ideas are so well grounded that they deserve a citation. The truth seems to be, that if there ever was a reason to close the exchange on Good Friday, no one remembers it.