Black Monday (1987)

Geschichteab 13 J.

On 19 October 1987, the Dow Jones fell 22.6% in a single day – the biggest one-day loss in stock market history. And: it fully recovered within 2 years.

Black Monday on 19 October 1987 was the largest percentage one-day loss in the history of the Dow Jones.

What happened:

• Dow Jones: −22.6% in a single day (from 2,247 to 1,739 points)
• S&P 500: −20.5%
• Stock markets fell worldwide: London −26%, Hong Kong −46%, Australia −42%
• Over 500 billion dollars of market value wiped out – in one day

The causes: computerised trading (early algorithms sold automatically when prices fell), overvalued markets, worries about the trade deficit and rising interest rates. The crash came "out of nowhere" – there was no single trigger.

The recovery: within 2 years the Dow Jones was back at its pre-crash level. Those who stayed invested lost nothing. Those who sold in the panic realised the loss.

Did you know? After Black Monday, the “circuit breaker” system was introduced: if the market falls 7% in a day, trading stops for 15 minutes, again at 13%, and at 20% for the rest of the day.

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