Glossary of Stock Market Terms - Black Monday
1987 |
Black
Monday 1987 : The term "Black
Monday" generally refers to the Monday
on October 19, 1987 when the Dow Jones Industrial
Average lost 22.6% and similar stock markets
around the world dropped enormous percentages,
too, making it one of the largest percentage
declines to occur in the stock market for
a single day.
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Some of the
international stock losses included Hong
Kong that lost 45.8%, Australia lost 41.8%,
Spain lost 31% and the stock market in the
UK lost 26.4%. Consumer pessimism caused
the market to drop to it's lowest point
on October 20. Although no clear reasons
have been found for the events on Black
Monday, some economic analysts attribute
the crash to human rationality and problems
with economic equilibrium.
Earlier in the year the Dow Jones Industrial
Average in the United
States of America hit an all-time high
of 2722 points in August, a growth that
may have resulted from slow, but steady
economic growth and dropping inflation.
But as the world moved into October of 1987,
the Dow began to lose points, dropping steadily
from October 14th through the 16th, potentially
causing fear over the weekend before it
reopened on October 19th.
Some analysts blamed program trading, a
computerized way to trade stocks based on
certain inputs. Although many blame the
automated calculations of program trading
for causing Black Monday, some economic
analysts still believe that Black Monday
was an inevitable outcome of an over-inflated
stock market and could not have been attributed
to program trading due to the international
nature of the event.
Black Monday is considered the official
beginning to the American recession of the
late 1980s. Although it lasted for only
a brief period, it was followed by another
recession in 1990.
Also called : Black Swan Event, 87
Crash, Stock Market Plunge of 1987, and
Black Tuesday in Australia and New Zealand
because of the time zone differences.
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