Donald Trump | Photo: AP
On October 19, 1987, the world witnessed one of the most catastrophic financial events in history, known as Black Monday. On that day, the US stock market saw its largest single-day percentage drop, with the Dow Jones Industrial Average (DJIA) falling by a staggering 22.6%. The event sent shockwaves through global markets, causing the S&P 500 to drop by an even sharper 30%.
Amid the ongoing US tariff policies, market expert and TV personality Jim Cramer issued a stark warning on his show Mad Money, suggesting that the markets could face another "bloodbath" akin to the 1987 crash. The uncertainty surrounding these tariffs has already rattled markets, and Cramer urged President Trump to engage with countries that have not yet imposed retaliatory tariffs in an effort to avert a global market downturn.
What led to the infamous Black Monday in 1987?
Black Monday saw an unprecedented decline in the global stock markets. The DJIA dropped by 22.6%, while the S&P 500 fell by 30%. This rapid collapse of stock values triggered a global financial crisis, leaving many to wonder whether the market could ever recover. The effects of the crash were felt worldwide, with most major stock indices losing over 20% of their value by early November 1987.
Several factors contributed to the Black Monday crash in 1987:
- Bull Market Correction: Leading up to Black Monday, the market had been in a strong bull run, with stock prices tripling since 1982. This created a need for a price correction.
- Computerised Trading: The 1987 crash was exacerbated by the rise of computer-driven trading systems. These systems triggered automatic buy and sell orders based on market fluctuations. When stock prices began to fall, these automated sell orders triggered a panic, causing further declines.
- Triple Witching: On October 16, 1987, the Friday before Black Monday, the simultaneous expiration of stock options, stock index futures, and stock index options, known as "triple witching," led to increased volatility. The massive sell-off on that day resulted in panic trading when the markets reopened on Monday.
As of April 2025, some experts are drawing parallels between the current market climate and the events leading up to Black Monday. On April 4, 2025, the US stock market experienced its worst trading session since the COVID-19 pandemic, wiping out over $5 trillion in market capitalization. Key indices suffered heavy losses, prompting fears that another global market crash could be on the horizon.
Jim Cramer, known for his market insights, raised alarms on his CNBC show, Mad Money, predicting that a significant crash could happen on April 7, 2025. He highlighted the ongoing trade disputes, particularly with US President Trump's tariff policies, as a major contributor to market instability. Cramer warned that unless President Trump took action to engage with countries that had not retaliated with tariffs, the financial situation could worsen.
Market experts are closely monitoring the potential for another Black Monday-like event. The combination of trade tensions, rising interest rates, and global economic instability could trigger another sharp downturn. Investors are watching closely to see if governments and central banks can stabilize markets before a crash occurs.
Stock market crash
Investors' wealth eroded sharply by Rs 20.16 lakh crore on Monday morning as the benchmark indices faced heavy drubbing, with the Sensex dropping over 5 per cent, amid a global market meltdown due to growing trade war concerns.
The 30-share BSE benchmark tumbled 3,939.68 points or 5.22 per cent to 71,425.01 in early trade.
Mirroring the bearish trend in equities, the market capitalisation of BSE-listed firms declined sharply by Rs 20,16,293.53 crore to Rs 3,83,18,592.93 crore (USD 4.50 trillion) during the morning trade.
All the Sensex firms were trading lower. Tata Steel and Tata Motors dropped over 10 per cent each. Larsen & Toubro, HCL Technologies, Adani Ports, Tech Mahindra, Infosys, Tata Consultancy Services, Reliance Industries and Mahindra & Mahindra were the other big laggards.
In Asian markets, Hong Kong's Hang Seng index tanked more than 11 per cent, Tokyo's Nikkei 225 plunged 7 per cent, Shanghai SSE Composite index dropped nearly 7 per cent and South Korea's Kospi sank over 5 per cent.
US markets ended significantly lower on Friday. The S&P 500 tanked 5.97 per cent, Nasdaq composite slumped 5.82 per cent, and the Dow tumbled 5.50 per cent on Friday.
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