If the Dow Jones Average were to tumble on Monday by the same 22.6% level that occurred in 1987, the average would have to drop by almost 9,000 points from last Friday's close of 39,737.

One of the stocks that until recently has been masking the true state of the U.S. economy is NVIDIA (NVDA), which one of the leaders in the development of AI technology.
-NW

Stock Market Crash of 1987
Federal Reserve History
by Donald Bernhardt and Marshall Eckblad
Federal Reserve Bank of Chicago

The first contemporary global financial crisis unfolded on October 19, 1987, a day known as “Black Monday,” when the Dow Jones Industrial Average dropped 22.6 percent.

Events Leading Up to the Crash

What Caused Black Monday

The Fed’s Response

The first contemporary global financial crisis unfolded in the autumn of 1987 on a day known infamously as “Black Monday.” A chain reaction of market distress sent global stock exchanges plummeting in a matter of hours. In the United States, the Dow Jones Industrial Average (DJIA) dropped 22.6 percent in a single trading session, a loss that remains the largest one-day stock market decline in history. At the time, it also marked the sharpest market downturn in the United States since the Great Depression.

The Black Monday events served to underscore the concept of “globalization,” which was still quite new at the time, by demonstrating the unprecedented extent to which financial markets worldwide had become intertwined and technologically interconnected. Black Monday led to a number of noteworthy reforms, including exchanges developing provisions to pause trading temporarily in the event of rapid market sell-offs. In addition, the Federal Reserve’s response set a precedent for the central bank’s use of “liquidity” to stem financial crises.

Events Leading Up to the Crash

Stock markets raced upward during the first half of 1987 [SOUND FAMILIAR?]. By late August, the DJIA had gained 44 percent in a matter of seven months, stoking concerns of an asset bubble. In mid-October, a storm cloud of news reports undermined investor confidence and led to additional volatility in markets. The federal government disclosed a larger-than-expected trade deficit and the dollar fell in value. The markets began to unravel, foreshadowing the record losses that would develop a week later.