For months, the stock market experienced strong growth, and share prices were roaring. Investors felt confident as they watched their investments increase in value. It seemed like a time of easy success for everyone involved in the market.
However, this confidence was shaken by troubling reports. News began to circulate that many banks were in a difficult position. The problem was caused by a large number of souring debts, meaning that people and businesses were failing to repay their loans.
These bad loans started to damage the banks' financial health. The official reports, known as balance sheets, showed the growing risk. For the first time in a while, the reality of this risk became clear to the public, and the positive mood began to change.
The news rattled investors, who suddenly feared that the banking system was unstable. Worried about a wider economic crisis, they rushed to sell their shares to avoid major losses. This wave of selling caused stock prices to fall, ending the market's long period of growth.