The 1987 stock market crash: Original news report

from the independent news this is USA

tonight with Brad Holbrook good evening

today is Black Monday the day the Dow

dropped more than 500 points the day the

Dow dropped more than 22 percent almost

double the rate of the Black Monday that

signal the beginning of the crash of

1929 but this crash of 1987 is not just

an American experience around the world

stock markets fell faster than a

skydiver without a parachute

the panic starting in Tokyo this morning

while the West slept one cause of the

sell-off was reaction to last week's 236

point drop in the Dow the result the

Nikkei Average was down 260 yen then

like a plague cell fever headed west in

Frankfurt fears of higher interest rates

in the u.s. triggered the drop there in

two and a half hours of trading the

Commerzbank share index fell 132 points

in London an even larger drop the

British market trying to cope with

Friday's national computer failure was

thrown into a near panic the result the

London Financial Times Index down more

than 183 the biggest one-day drop in

Britain's history and from there to Wall

Street where the numbers speak for

themselves unofficially the now stands

at 17 thirty-eight point 41 a drop of

more than 508 points with a volume of

more than 600 four million shares proof

as Alec Roberts reports that the panic

hit a fevered pitch

from the opening bell the market was in

free fall after last Friday's record 108

point loss analysts had expected a rally

instead it's a panic everyone's in pain

everybody we're trying to find a bottom

we're trying to as a floor broker I I

see stocks training 10 points below

where they traded Thursday and I'm

saying just kind of it this has to be

the bottom and they trade five points

lower the net by noon the market was

down about a hundred and fifty points

the tape delayed by more than an hour

but it only got worse as trading brokers

struggled to cope with a blizzard of

sell orders since the market hit a high

of 2722 last August it lost seventeen

and a half percent of its value to 20 to

46 by Friday and another five hundred

and eight points today more and more

analysts believe that the bear market is

here to say it's not that the economic

news is so much worse in fact some

indicators are showing unexpected

strength it's the psychology that's

changed while for five years investors

have looked at the economy as a glass

that is half-full now they're seeing it

as half-empty reasons for the decline

have been floating around for months an

accident waiting to happen according to

one analyst renewed inflation fears with

a decline in the dollar rising interest

rates and huge budget and foreign trade

deficits a nation living for too long

beyond its means the results of the

decline will hit millions of people in

their investments pension plans their

mutual funds and eventually every

segment of the economy higher interest

rates for example will hurt the housing

market even normally optimistic analyst

Larry Wachtel doesn't see a quick

recovery what usually happens in cases

like these where the psychologist was so

scarred is that once there is a

technical rally back in which people are

low on the rally and you go through a

long quiet period the people I got out

don't want to get in the people are

wanting again aren't sure about that

whether they want to get in now as you

go through a long quiet convalescence

period President Reagan however was more

optimistic our productivity is up so is

our manufacturing product up there is no

runaway inflation as there has been in

the past so as I say I don't think

anyone should panic

in New York this is Alec Roberts

reporting joining us now is Stephen

Malin senior a senior economist for the

conference board the country's largest

business sponsored research organization

Stephen there is late word tonight I

don't want to spring you on spring this

on you unawares that on the Tokyo

exchange there's a little bit of a

rebound or actually they're calling it a

strong rebound on the dollar market

there would that be an indicator that

things here might sweeten up tomorrow

well I don't know if that's a sign that

things will sweeten up it's a sign that

I think that the people in Tokyo don't

want to see any more pessimism in

America it's a mild sign of slight

confidence but it is not a sign of

optimism at all what would it take to

stem the losses here well tomorrow's

indications would be that you you would

see a market which is much less

violently up and down if we see

something which is down but not

violently down if we see volumes trading

volumes which are not quite so large I

think we would see a sign that this is

starting to stem in terms of 1929 which

everyone's comparing this to us saying

it was double that in terms of

percentage of loss there are a lot of

other things that don't match up with

1929 in terms of the economy how do you

assess the effect this would have as

opposed to the one in 1929 well this is

a very different economy in the sense

that it's a lot stronger economy and

most of all it is a global economy the

1929 economy did not have the openness

of our markets we are much more now a

trading economy an economy that relies

on those foreign markets and the key

foreign market as we learned today is

the financial market and that to me is

the big big difference okay now we have

a lot of people that play with very big

bucks in the financial markets what

about the rest of us who don't have more

than a passing interest in the stock

market should we be concerned or

interested in what's going on oh you

better believe it

everything that happened today should

shake us up first of all people who have

mortgages have to be concerned about

their interest rates now the interesting

thing is that we're not going to see a

violent rise in interest rates

associated with this and that's a good

sign but we might see a mild movement

upward and that's fine what we may also

see however is that Savings Plans and

people who are involved in those are

going to get hit because a lot of those

are involved with mutual

funds and people who are in mutual funds

got hit hard very very very well today

now what about their looking at the blue

chip stocks that everyone analyzes for

mutual funds they're very cheap tomorrow

morning would you be interested in

buying them this early no I wouldn't

touch anything yet what we're going to

have to do is look at what happens when

we wake up in the morning tomorrow and

see what happened in the Asian and

European markets what could very well

happen is that we're going to see signs

of more chaos and if we do then you want

to stay out Stephen do you see any

winners and what happened today well I'd

like to be a stock broker cashing in on

some of the Commission's today good

point a lot of activity there Stephen

maila thank you very much for being with

us

elsewhere America's richest man Sam

Walton who's chairman of Walmart stores

incorporated was unaware of the market

plunge for most of the day today and

when he was told about it Walton said

he'll take care of his company in the

market can take care of itself

Walton controls about 218 million shares

of Walmart stock which means he just

lost about a billion dollars today