Black Monday (1987)

On October 19, 1987, the Dow Jones Industrial Average fell 508 points, 22.6 percent, in a single session, the largest one-day percentage decline in the index's history. The crash began in Asian markets outside Japan and moved westward through Europe before hitting the United States and finally Japan, a genuinely global event with worldwide losses estimated at 1.71 trillion US dollars. The cause remains debated: contemporary analysts blamed computerized program trading and portfolio insurance, a hedging strategy that sold stock automatically as prices fell, for amplifying the decline, while economist Hayne Leland and a later Chicago Mercantile Exchange study argued ordinary investors, mutual funds and broker-dealers drove several times more of the selling than portfolio insurers did. Newly installed Federal Reserve chair Alan Greenspan, weeks into his term, responded the next morning with a public statement affirming the Fed's readiness to supply liquidity to the financial system, widely credited with containing the crash's spread into the broader economy.