Black Monday 1987

39 years ago, Wall Street experienced the largest single-day percentage decline in the history of the Dow Jones Industrial Average. Dow Jones: −22.6% in a single session.

I was a kid, and I still remember exactly where I was when I watched the 8 o’ clock news with my parents.

The index lost 508 points, wiping out approximately $500 billion in US stock market value.

There was no single trigger. Rising interest rates, concerns over the US trade deficit, market valuations and automated portfolio insurance strategies all contributed to the collapse.

The crash exposed the risks of interconnected markets, automated selling and disappearing liquidity.

It also led to major changes in market structure, including the introduction of circuit breakers designed to temporarily halt trading during extreme volatility.

39 years later, technology has transformed financial markets. But liquidity, leverage and investor psychology remain just as important.

Source: Valérie Noël