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Throwback Thursday: How The Media Covered Wall Street's 'Black Monday' In 1987

Throwback Thursday: How The Media Covered Wall Street's 'Black Monday' In 1987

The numbers spoke for themselves.

22.6 percent. 508 points. 604 million shares.

They told the story of the SPDR Dow Jones Industrial Average ETF (NYSE: DIA) nightmare that shook the markets 30 years ago.

Delayed print media and TV news eventually lent context to the “Black Monday” plunge, serving more as historical accounts and reflective pieces rather than actionable guides. Here is a sample of the perspective they provided in the hours following the fall:

‘The Law Of Gravity Hit Wall Street’

For Nightly Business Report, the story was the panic selling, the confusion, the frantic pace of the day. Footage shows laymen congregating on Wall Street to watch the Dow drop.

From the floor, one trader said he’d expected such a move over the course of weeks, but it took mere days. Another predicted an ensuing “calming effect” and stabilization.

Their juxtaposed shock and hope were paralleled in the chairmen of the Securities and Exchange Commission and the American Stock Exchange, who suggested divergent administrative reactions. The former intimated an intent to, at some undetermined point, request a temporary trading halt, but the latter advised against any such “artificial interference.”

Nightly Business Report’s other interviewed sources called the plunge an expected “correction” catalyzed by awareness of a poor bond market, forced mutual fund redemptions, computer-driven strategies and the U.S. Treasury secretary’s suggestion that there was a need for a decline in the dollar.

‘Piercing Of The Bubble’

FNN Market Wrap took a deep dive into trader mentality.

A visibly deflated Paul Tudor Jones of Tudor Investment Corporation said he had expected such a break, although not until early the next year.

“Wall Street uniformly was unprepared for this magnitude of a drop,” Tudor Jones said.

He anticipated the beginning of a long-term bear market; predicted “massive” government intervention; and considered the following day “the culmination of the selling climax for now — and I emphasize ‘for now.’”

“Every American at this stage of the game needs to get their house in order, needs to be prudent and conservative in their investments, needs to cut back on whatever speckled investments they have,” he said, advising a move into short-term treasury instruments. “I think the next few years will be a period of capital preservation.”

‘The Financial Equivalent Of The Chernobyl Nuclear Disaster’

The global and timeless nature of fear was the focus of The Los Angeles Times, whose “Bedlam on Wall Street” article offered no optimism for and made no mention of an expected recovery.

“The sharp declines may be far from over,” the post read, noting that an ensuing freefall among Tokyo stocks could herald additional downside to the Dow.

It quoted the chairman of the New York Stock Exchange comparing the slippage to the preceding year’s Chernobyl disaster, while an executive at the brokerage of Dean Witter Reynolds called it “an economic crisis of international proportions.”

‘Does 1987 Equal 1929?’

Despite its alarmingly blunt, all-caps title, The New York Times’ front-page feature reassured Americans that their economic fate could be no worse than it would have been during the crash of 1929.

Citing economists, the Times abated rampant fear with cool academics, referencing the many safeguards instituted to prevent poverty-inducing financial collapses.

“Among the important differences between today and 1929 are Federal deposit insurance, unemployment insurance and Social Security insurance and other elements of what has come to be known as the safety net,” the article read. “These not only guarantee against widespread destitution; their very existence should also help to prevent the kind of financial panic that fed on itself in the Depression.”

Related Link: Wall Street's 'Black Monday' Turns 30: What Happened On Oct. 19, 1987?


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Posted-In: 10/19/87 Black Monday FNN Market Wrap LA Times Nightly Business Report NY TimesEducation General Best of Benzinga

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