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On Monday, October 19, 1987 (Tuesday, October 20, in some time zones), world stock markets crashed, wiping out billions in paper values in a matter of a few short hours. To mark the anniversary of this grim financial event, here are some trivia questions to test your knowledge of 1987's Black Monday, its causes, and how it compares with the stock market crash of 1929. How much do you know?
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☑️ How Much Did the Dow Industrials Drop on Black Monday?
Only two months before Black Monday, the Dow Jones Industrial Average had peaked at 2722 points, more than 800 points higher than its 1986 close at 1895 points. In the days leading up to Black Monday, the U.S. stock market had begun showing signs of profound weakness, dropping 3.8 percent on Wednesday, October 14; followed by a decline of 2.4 percent on Thursday, October 15, and 4.6 percent on Friday. The following Monday, panicked selling in early-opening Asian markets spread around the world. By the close of trading in New York, the DJIA had dropped a whopping 508 points from 2246.74 to 1738.74 points. This drop of 22.6 percent was the largest single-day percentage decline in DJIA history.
☑️ How Did Black Monday Compare with Black Tuesday in 1929?
Like the Wall Street rout of 1987, the stock market crash on Tuesday, October 29, 1929, was the culmination of several days of panicked selling. As in 1987, the stock market had peaked in August 1929, fueled by wild-eyed speculation that flew in the face of economic indicators that had already started pointing downward. On Monday, October 28, 1929, the Dow Jones Industrial Average dropped 12.82 percent to close at 260.64, followed by an additional drop of 11.73 percent on Black Tuesday. Billions in paper value were lost, wiping out countless investors and signaling the start of the Great Depression.
☑️ What Led to Black Monday 1987's Market Crash?
In the immediate aftermath of the 1987 crash, John J. Phelan, chairman of the New York Stock Exchange, told the Wall Street Journal that the market was "as close to financial meltdown as I'd ever want to see." Phelan cited five factors that he believed were largely responsible for triggering the crash. Those included the fact that the market had gone five years without a significant correction; rising interest rates; inflation fears; the ongoing U.S. conflict with Iran; and market volatility linked to derivative instruments, such as futures and stock-index options. Other market observers pinned some of the blame on the rapid spread of program trading, also known as computer trading, and a lack of liquidity in the equities markets.
☑️ How Long Did It Take the U.S. Market to Recover?
In sharp contrast to the scenario of 1929, the stock market crash of 1987 did not usher in an extended period of hard times for the U.S. economy. In fact, economic growth was strong throughout the remainder of 1987 and for all of 1988. Less than two years after Black Monday, the Dow Jones Industrial Average had recovered all of the lost ground, climbing back to its pre-crash closing high of 2722 points by early 1989.
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☑️ How Much Did the Dow Industrials Drop on Black Monday?
Only two months before Black Monday, the Dow Jones Industrial Average had peaked at 2722 points, more than 800 points higher than its 1986 close at 1895 points. In the days leading up to Black Monday, the U.S. stock market had begun showing signs of profound weakness, dropping 3.8 percent on Wednesday, October 14; followed by a decline of 2.4 percent on Thursday, October 15, and 4.6 percent on Friday. The following Monday, panicked selling in early-opening Asian markets spread around the world. By the close of trading in New York, the DJIA had dropped a whopping 508 points from 2246.74 to 1738.74 points. This drop of 22.6 percent was the largest single-day percentage decline in DJIA history.
☑️ How Did Black Monday Compare with Black Tuesday in 1929?
Like the Wall Street rout of 1987, the stock market crash on Tuesday, October 29, 1929, was the culmination of several days of panicked selling. As in 1987, the stock market had peaked in August 1929, fueled by wild-eyed speculation that flew in the face of economic indicators that had already started pointing downward. On Monday, October 28, 1929, the Dow Jones Industrial Average dropped 12.82 percent to close at 260.64, followed by an additional drop of 11.73 percent on Black Tuesday. Billions in paper value were lost, wiping out countless investors and signaling the start of the Great Depression.
☑️ What Led to Black Monday 1987's Market Crash?
In the immediate aftermath of the 1987 crash, John J. Phelan, chairman of the New York Stock Exchange, told the Wall Street Journal that the market was "as close to financial meltdown as I'd ever want to see." Phelan cited five factors that he believed were largely responsible for triggering the crash. Those included the fact that the market had gone five years without a significant correction; rising interest rates; inflation fears; the ongoing U.S. conflict with Iran; and market volatility linked to derivative instruments, such as futures and stock-index options. Other market observers pinned some of the blame on the rapid spread of program trading, also known as computer trading, and a lack of liquidity in the equities markets.
☑️ How Long Did It Take the U.S. Market to Recover?
In sharp contrast to the scenario of 1929, the stock market crash of 1987 did not usher in an extended period of hard times for the U.S. economy. In fact, economic growth was strong throughout the remainder of 1987 and for all of 1988. Less than two years after Black Monday, the Dow Jones Industrial Average had recovered all of the lost ground, climbing back to its pre-crash closing high of 2722 points by early 1989.
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