Black Monday (1987)

Black Monday is the name ascribed to Monday October 19, 1987. On that day, the Dow Jones Industrial Average fell 22.6%, the largest one-day decline in recorded stock market history. This one day decline was not confined to the United States, but mirrored all over the world. By the end of October, stock markets in Australia had fallen 41.8%, Canada 22.5%, Hong Kong 45.8%, and the United Kingdom 26.4%.

Related Topics:
Monday - October 19 - 1987 - Dow Jones Industrial Average - Stock market - United States - Australia - Canada - Hong Kong - United Kingdom

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(The terms Black Monday and Black Tuesday are also applied to October 28 and 29, 1929, the follow-ups to Black Thursday, which started the stock market crash of that year.)

Related Topics:
1929 - Black Thursday - Stock market crash

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A certain degree of mystery is associated with the 1987 crash. Many have noted that no major news or events occurred prior to the Monday of the crash, the decline seeming to have come from nowhere. Important assumptions concerning human rationality, the efficient market hypothesis, and economic equilibrium were brought into question by the event. Debate as to the cause of the crash still continues many years after the event, no firm conclusions having been reached.

Related Topics:
Human rationality - Efficient market hypothesis - Economic equilibrium

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In the wake of the Crash, markets around the world were put on restricted trading, in many cases because sorting out the orders that had come in was beyond the computer technology of the time, and it gave the Federal Reserve and other central banks time to pump liquidity into the system to prevent a further downdraft. While pessimism reigned, the market bottomed, leading some to label Black Monday a "selling climax", where the excess value was squeezed out of the system.

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