18 October 2005

This Day In History

1987 Panic attack on wall street

In 1987, the markets were enjoying a record-setting bull run, seemingly unbothered by occasional cocaine scandals or the arrest of Ivan Boesky. However, on October 19, "panic selling" sent the Dow into an unprecedented 508-point freefall. After a day of frantic action, the markets had shed 23 percent of their total value. The staggering loss sent analysts scurrying to find a smoking gun--and they found several. Along with the usual suspects, inflation and rising interest rates, the announcement of a surprisingly steep trade deficit and news of an American attack against Iran were both blamed for Wall Street's woes. Some industry insiders looked even closer to home, speculating that the market's computerized trading system played a role in sparking the crash. The computers, however, refused to comment on the incident.

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