Black Monday

AAA

DEFINITION of 'Black Monday'

October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning of a global stock market decline, making Black Monday one of the most notorious days in recent financial history. By the end of the month, most of the major exchanges had dropped more than 20%.

INVESTOPEDIA EXPLAINS 'Black Monday'

Interestingly enough, the cause of the massive drop cannot be attributed to any single news event because no major news event was released on the weekend preceding the crash. While there are many theories that attempt to explain why the crash happened, most agree that mass panic caused the crash to escalate.

Since Black Monday, a number of protective mechanisms have been built into the market to prevent panic selling, such as trading curbs and circuit breakers.

RELATED TERMS
  1. Black Wednesday

    The day when the British government was forced to withdraw the ...
  2. Stock Market Crash Of 1987

    A rapid and severe downturn in stock prices that occurred in ...
  3. Silver Thursday

    A steep fall in the price of silver that occurred on Thursday ...
  4. Kondratiev Wave

    An economic theory created by Soviet economist Nikolai Kondratiev ...
  5. Trading Curb

    A temporary restriction on program trading in a particular security ...
  6. Correction

    A reverse movement, usually negative, of at least 10% in a stock, ...
RELATED FAQS
  1. What is Black Monday?

    Monday October 19,1987, is known as Black Monday. On that day, stockbrokers in New York, London, Hong Kong, Berlin, Tokyo ... Read Full Answer >>
  2. Where can I find current data on stock buyback offers?

    Many financial websites, such as Bloomberg and Marketwatch, provide information about past and current stock buyback offers. ... Read Full Answer >>
  3. Did the repeal of the Glass-Steagall Act contribute to the 2008 financial crisis?

    The repeal of the Glass-Steagall Act was a minor contributor to the financial crisis, if it contributed to the crisis at ... Read Full Answer >>
  4. What types of stocks have a small difference between bid and ask prices?

    Generally, stocks that offer high liquidity have tight bid-ask spreads. Stocks that have a high volume and trade on a daily ... Read Full Answer >>
  5. What is the definition of "Financial Instruments Business" under the FIEA?

    The Financial Instruments and Exchange Act (FIEA) defines a financial instruments business as any firm with the primary business ... Read Full Answer >>
  6. What are the benefits of investing in a cyclical stock?

    Cyclical stocks tend to be highly correlated with the overall business cycle, so an investor can invest in a cyclical stock ... Read Full Answer >>
Related Articles
  1. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  2. Budgeting

    The Greatest Market Crashes

    From a tulip craze to a dotcom bubble, read the cautionary tales of the stock market's greatest disasters.
  3. Investing

    Should You Average Down When Trading Stocks?

    Averaging down on a stock can allow you to avoid having to admit you are wrong. On top of this and given enough time, the strategy can result in a profit.
  4. Investing Basics

    What is a Financial Market?

    “Financial market” is a broad term used to describe any forum where buyers and sellers meet to trade assets.
  5. Investing Basics

    Understanding Notional Value

    This term is commonly used in the options, futures and currency markets because a very small amount of invested money can control a large position.
  6. Investing Basics

    How to Calculate Risk Premium

    Think of a risk premium as a form of hazard pay for risky investments.
  7. Investing Basics

    What is Terminal Value?

    The terminal value of an asset is its anticipated value on a certain date in the future.
  8. Stock Analysis

    Why Not All Dow Stocks are Created Equal

    For the most part, the Dow has been on fire since March 2009. So profits of its components are growing, right?
  9. Investing Basics

    What is a "Coupon"?

    In the financial world, “coupon” represents the interest rate on a bond.
  10. Investing Basics

    What is a Cyclical Stock?

    A cyclical stock is an equity security whose price is affected by ups and downs in the overall economy.

You May Also Like

Hot Definitions
  1. Redemption

    The return of an investor's principal in a fixed income security, such as a preferred stock or bond; or the sale of units ...
  2. Standard Error

    The standard deviation of the sampling distribution of a statistic. Standard error is a statistical term that measures the ...
  3. Capital Stock

    The common and preferred stock a company is authorized to issue, according to their corporate charter. Capital stock represents ...
  4. Unearned Revenue

    When an individual or company receives money for a service or product that has yet to be fulfilled. Unearned revenue can ...
  5. Trailing Twelve Months - TTM

    The timeframe of the past 12 months used for reporting financial figures. A company's trailing 12 months is a representation ...
Trading Center