ChronoFive
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Setting the scene
Black Monday occurred October 19, 1987, when global stock markets crashed, with the Dow Jones falling 22.6% in one day—the largest single-day percentage drop in history. The Dow lost 508 points to close at 1,738. The crash began in Hong Kong and spread west through Europe to the U.S.
What happened
Causes included program trading, overvaluation, and rising interest rates. Unlike 1929, no economic depression followed—markets recovered within two years. The Federal Reserve, led by Alan Greenspan, provided liquidity and prevented a banking crisis. Circuit breakers were later introduced to halt trading during steep drops.
Why it still matters
Black Monday demonstrated the interconnectedness of global markets and the risks of computerized trading. It showed that crashes need not cause depressions if policymakers respond effectively. October 19 remains a reminder of market volatility.
Background
Circuit breakers were added to exchanges.