Stock Market Prices Plunge - October 1987

The Dow Jones industrial average, the most widely followed barometer of stock market activity, suffered its three biggest one-day point losses ever during the first half of October. A decline of 91.55in the average on October 6, was attributed to concern over rising interest rates. On October 7, major banks raised their prime lending rates from 8.75 percent to 9.25 percent, the fifth increase of the year. The Commerce Department reported, October 14, that the U.S. trade deficit had shrunk to $15.7B in August, but it had been widely expected that the deficit would be much smaller. As a result, stock prices fell again, with the Dow Jones average declining by 95.46 points. On October 16, the Dow tumbled 108.36 points, the first time the Dow had lost 100 points in a single session. In terms of percentages, the declines of October 1987 were still substantially smaller than the disastrous declines of October 1929. By October 16, the Dow Jones average had slipped some 450 points below its all-time August highs.