The 1973–1974 bear market followed the collapse of the postwar Bretton Woods monetary system and the 1973 oil shock.
The downturn affected major markets from 1973 into 1974. In the United States, the S&P 500 fell substantially as inflation, recession, political uncertainty, and higher energy costs damaged economic expectations. The breakdown of the dollar’s convertibility into gold had already ended the fixed-exchange-rate framework associated with Bretton Woods.
The October 1973 oil embargo by Arab members of OPEC after the Yom Kippur War then contributed to a dramatic rise in oil prices and worsened inflationary pressure. The crisis is sometimes reduced to the oil shock alone, but monetary disruption, economic weakness, and the Watergate scandal were also important parts of the market environment.