Stock Market Crash of 1987
Stock Market History
The stock market crash of 1987 was one of the worst crashes in the history of the stock market. At the time, it was likened to the stock market crash of 1929.
Between Wednesday, October 14 and Friday, October 16, 1987; the Dow fell more than 260 points and the S&P dropped 10%. What followed was an anxious weekend for investors.
October 19, 1987
Black Monday
At least in part because of program trading, sell orders flooded the markets.Program trading software automatically initiates trades based on a set of predetermined market parameters. Allowing this type of trading to go on on a large scale in a somewhat illiquid market was not without foreseeable consequences. In fact a young futures trader named
Paul Tudor Jones II
not only predicted the 1987 stock market crash but tripled his money by taking large short positions on the way down. On Black Monday 1987 the DJI fell 508 points (22%). The S&P dropped 20.4%. Investors lost $500 billion that day. As it does after every stock market crash, the U.S. government conducted a study with the goal of determining what caused the crash. The
Securities Exchange Commission
then introduced measures to prevent it from happening again. The recovery was quick. On October 20, 1987; the Dow rallied hard posting a gain of 102.27 points. This was followed by a gain of 186.64 points on October 22. By September of 1989, the DJI had regained all of its losses. By December 1989, The Dow Jones was once again setting new highs.
Stock Market Crash of 1987
Aftermath
Wall street lost 15,000 jobs but the U.S. avoided a recession.Some other countries did not fare as well and took several years to recover. In December of 1987, a group of 33 prominent economists from several countries met in Washington, D.C. They concluded that the following few years could be the most troubled since the great depression stock market crash. They were wrong. The markets realized a calendar year gain in 1987, 1988, and 1989.
Black Monday Stock Market Crash
What Caused It ?
There is no clear answer to this question.The Brady Commission concluded that the failure of stock and derivative (options and futures) markets to act in sync was the primary cause of the stock market crash of 1987.Many stock market analysts felt that program trading by large firms was the culprit. The problem with this view is that world stock markets crashed, not just the wall street stock market where program software trading was prevalent.On October 15, legislation that eliminated the tax deduction of interest on debt used for corporate takeovers passed the House Ways & Means Committee. The NY stock market reacted immediately and negatively to news of its progress. The sectors that led the decline were those most affected by this legislation.That the government subsequently removed the provisions which affected the stock market before enacting the legislation suggests an awareness of the harm done and the desire to undo it. A large U.S. trade deficit was announced on October 14, 1987. Foreign investors pulled out of dollar-denominated investments fearing that the dollar would fall in value. This caused a sharp rise in interest rates.Long term bond yields rose to 10% during the summer of 1987. This made bonds an attractive alternative to stocks for many investors.
The Stock Market Crash of 2007
The stock market crash of 2007-2009 was one of the most devastating crashes in stock market history. It was led by a real estate or housing market crash.
Stock Market Crash of 1929
Stock market crash 1929 facts. Cause of stock market crash in 1929. What caused the great depression stock market to crash? After the stock market crash of 1929.
Return to Stock Market Crashes
The stock market crashes of 1929, 1987 and 2007. Black Monday 1987. Black Tuesday 1929. Black Thursday. 1929 crash chart.
Return to U.S. Stock Market History
U.S.A. stock market history online. Facts, stock market exchanges. History of the stock market in America. Brief history of stock market trading. Stock market crash history.
Go from Stock Market Crash of 1987 to 1929 Stock Market Crash Chart
This 1929 stock market crash chart shows the 20 day moving average technical analysis indicator crossing beneath the 50 day EMA and giving a clear sell signal.
Go from Stock Market Crash of 1987 to Work from Home Opportunities
|
