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31 Years After Black Monday, the Fed Still Plays a Supporting Role in the Market

randall_w._forsyth

At the end of a tumultuous week, few investors took note that Friday was the 31st anniversary of Black Monday—Oct, 19, 1987. The Dow popped up 548 points on Tuesday, but that amounted to less than a tenth of the percentage change of Black Monday. Black Monday’s significance, more than being the single worst day for stocks in U.S. history, is that it established what became known as “the Greenspan put.” To counter the feared economic impact of a stock-market meltdown, the Fed under then-Chairman Alan Greenspan cut interest rates, stoking a huge bond rally, which led to a recovery in equities.