Black Monday: Markets Fall Faster Than Systems Can Cope
On October 19, 1987, the Dow Jones Industrial Average fell 22.6 percent.
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A Global Market Shock
On October 19, 1987, the Dow Jones Industrial Average fell 22.6 percent. The day became known as Black Monday and formed part of a wider international market crisis.
More Than Falling Prices
The shock affected the functioning of markets as well as the value of investments. Trading capacity, uncertainty and the ability to complete transactions became central concerns.
A System Under Strain
The Federal Reserve’s historical analysis examines market mechanisms and institutional responses. That perspective is broader than a simple story about one trader or one dramatic sell order.
The Response
Authorities focused on maintaining liquidity and the operation of financial markets. The episode became an important case for studying how a central bank responds to an abrupt systemic disturbance.
A Historical Comparison
The crash should not be confused with October 1929. The dates, economic setting and subsequent outcomes differed, even though both episodes acquired memorable color-coded names.
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