Black Monday...the stock market crash of 1987
In late 1985 and early 1986, the United States economy shifted from a rapid recovery from the
early 1980s recession to a slower expansion, resulting in a brief "
soft landing" period as the economy slowed and
inflation dropped. The stock market advanced significantly, with the Dow peaking in August 1987 at 2,722 points, or 44% over the previous year's closing of 1,895 points. Further financial uncertainty may have resulted from the collapse of
OPEC in early 1986, which led to a crude oil price decrease of more than 50% by mid-1986.
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On October 14, the DJIA dropped 95.46 points (3.8%) (
a then record) to 2,412.70, and fell another 58 points (2.4%) the next day, down over 12% from the August 25 all-time high.
On Thursday, October 15, 1987,
Iran hit the American-owned (and
Liberian-flagged)
supertanker, the
Sungari, with a
Silkworm missile off Kuwait's main
Mina Al Ahmadi oil port. The next morning, Iran hit another ship, the
U.S.-flagged MV Sea Isle City, with another Silkworm missile.
On Friday, October 16, when all the markets in London were unexpectedly closed due to the
Great Storm of 1987, the DJIA fell 108.35 points (4.6%) to close at 2,246.74 on record volume. Then-
Treasury Secretary James Baker stated concerns about the falling prices.
The crash began in Far Eastern markets the morning of October 19, but accelerated in London time—largely because London had closed early on October 16 due to the storm—by 9.30am the London FTSE100 had fallen over 136 points. Later that morning, two U.S. warships shelled an Iranian oil platform in the Persian Gulf in response to Iran's Silkworm missile attack on the
Sea Isle City.
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