Salem Press

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Black Monday
Hundreds of traders on Wall Street responded to fears about inflation and rising interest rates by using newly installed computerized trading programs to sell stocks, thereby causing the Dow Jones Industrial Average to suffer the largest one-day point loss and the second largest one-day percentage loss in its history to that date.

On October 19, 1987, the New York Stock Exchange (NYSE) experienced a dramatic sell-off, in which most of the stocks listed on the exchange lost a great deal of their value. The Dow Jones Industrial Average, which tracked the value thirty blue-chip stocks listed on the NYSE, plunged 508 points to close at 1,738.74. The drop equaled 22.6 percent of the average, which had stood at 2,246.74 at the beginning of the day's trading. The overall net loss in market capitalization of all stocks affected by the crash has been estimated at roughly half a trillion dollars. That is, in one day, around $500 billion in stock value simply ceased to exist.

Black Monday had global repercussions, as stock prices around the world reeled. News of the stock market crash dominated television, as the three major networks preempted their regular programming to provide special coverage of the crash. Cable news networks, particularly CNN, offered continuous coverage. David Ruder, head of the Securities and Exchange Commission (SEC), threatened to close the markets in order to stop the slide. President Ronald Reagan announced that he was puzzled by the financial events, as nothing was wrong with the economy. He urged Americans not to panic. Since Black Monday conjured images of the start of the Great Depression, many Americans found it difficult to remain calm.