Oct. 19, 1987: Black Monday hits Wall Street

Stocks plunged a record 508 points -- at the time, the largest one-day drop in market history.
4:41 | 10/16/17

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Transcript for Oct. 19, 1987: Black Monday hits Wall Street
I wouldn't want to be around for a day worse than this that is what the president of the New York Stock Exchange said when the market closed today down by every conceivable measure. Down by more than it's ever been before. The last Dow Jones count we have today is down 508. Points but they are still counting on Wall Street. And the final numbers won't be available perhaps until noon tomorrow. And it is down and every other world market as well the actual numbers make it look worse than the great crash in 1929. However this is 1987 the whole environment is different. Still all is never been a day quite like me begin with our business correspondent Stephen off. And it was clear from the opening bell. As investors large and small sought to get out of the market to sell at any price. The market makes me feel very nervous now. It's going up and down every a couple of days. It's time to get out. For a number of major stocks no buyers were to be had everybody wanted to sell. So that meant some well known companies couldn't even open for trading for hours. Exxon the world's biggest oil company didn't begin trading for nearly two hours after the stock exchange opened IBM was an hour and fifteen minutes late. Shares of Walt Disney couldn't even begin trading until 11:12 AM that was an hour and three quarters after the market opened. Penetrated for just six minutes until another barrage of sell orders hit then Disney didn't trade for another two hours for dozens of companies it was the same. And when they did open. Down like a rock. You have a definite element of panic in here because a lot of stocks being sold down to levels that have not have not been seen for a year maybe year and a half. They're being sold out indiscriminately. The on the basis that they don't people don't know really gonna go or what point the market is going to stop and therefore they sell stocks. And the panics fed on itself. Take a look at the Dow Jones Industrial Average and 10 AM a half hour after the market opened it was already down 68 points by eleven down more than 200. Around noon at seem to recover a bit and it plunged on down for the afternoon. Closing at 1738 point 41 down more than 508. Points for the day. In percentage terms that's down 22 point 6%. By comparison the biggest previous drop on December 12 1914. Was more than 24%. And October 28 1929. Was more than 12%. Among the most active individual stocks such widely held company is is AT&T closed down six and 18 to 24. Two weeks ago before the big drop AT&T was selling for 33 and a half. General Electric down nine and 18 to 41 and five eighths have been 65 and five eighths. Exxon closed down eight and a half to 35. Two weeks ago Exxon was 49 and three quarters and trading colossal about 605 million shares changed hands double the previous record. But comparing today's trading and out of the big collapse in 1929 brings up some differences. Then the trading was fed by margin calls few investors in those days owned their stocks out right they bought them for 10% down 10% margin. And to do with billions of dollars have been borrowed from banks and brokerage houses that had to sell them out at any price just to try paying off the loans. Today investors have to put up at least 50% of the price to buy on margin. But most of the trading is done by the institutions which by their shares outright for cash so margin selling is less a factor in this drop. So what's going on here. And our opinion. This market will settle down but it's gonna take time perhaps several months before we see a renewal of the fire mobile trash. The market looked down must immune resilient. Nothing seemed to Dennett and if anything confidence and expectations on earnings this past summer. We're going even higher in the peak so I think we're coming down to earth the question is how badly bruised are you and it when he appeared. So the selling today had nothing to do with why people bought the stocks in the first place future profits dividends good management nothing mattered. It was just sell me out at any price because she wants the effect of these enormous sales by the computers within seconds to lead just jam up the system and set the panic going. While I am told that they certainly add to it computer generated trading. Can generate. Eighty million shares in a minute and that certainly feeds that market panic yet so it's that's in part what happened today even. That's what some of the analysis saying something Stephen thanks very much turbines that.

This transcript has been automatically generated and may not be 100% accurate.

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