Oct. 27, 1997: With the Dow Jones Industrial Average breaking records this week, it maybe hard to believe that nine years ago today the market witnessed one of its worst one-day loses prompting an unusual trading stoppage.
Stock markets around the world crashed because of fears of a global economic meltdown prompted by troubles in Asian economies. The Dow Jones Industrial Average plummeted 554.26 points to 7,161.15 — the third worst one-day lose in the Dow's history. For the first time, the New York Stock Exchange activated its "circuit breakers" twice during the day eventually prompting the controversial decision of closing the Exchange early.
The crash started overnight in Asia as Hong Kong's Hang Seng Index plummeted 6% and the Japanese Nikkei 225 fell 2%. Like a wild fire, the losses spread to the European markets where London's FTSE 100 Index fell 98.90 points, or just about 2%, to 4,871.30.
As anticipated that morning, when the Dow and Nasdaq opened, both immediately sank. By 2:36 P.M., the first "circuit breaker" was tripped when the Dow reached a 350 point lose for the day. Trading was halted for 30 minutes, but when trading resumed, stocks continued their slide, and in less than 30 minutes the second "circuit breaker" of 550 had been reached. Because the second breaker is supposed to force an hour timeout, NYSE officials opted to end the trading day at 3:35 P.M. Nasdaq trading was unaffected by the NYSE decisions and continued trading until 4:00 P.M.
Although the crisis in Asian markets continued the next day, the U.S. markets rebounded and the Dow closed up 337 points for its then highest one-day gain in history helping it recover almost two-thirds of the prior day's loss. —Matthew Wurtzel
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