October 20, 1987: Bad Start, Happy Ending
Despite talk of a delayed open, the NYSE starts trading at the usual time. The Dow opens sharply lower only to stage a 200-plus point rally and close with a gain of more 100 points at 1841. Trading volume surpasses that of the previous session.
|Companies embark on buyback plans in an effort to restore confidence and brokers push big-name bargains to entice investors from the sidelines. While blue chips jump, smaller stocks suffer again and losers still outnumber winners. Wall Street takes some comfort in the small victory.|
(Part 1) [03:03]
President Reagan meets with Treasury Secretary James Baker and Fed Chairman Alan Greenspan to help restore investor confidence. Washington sends a message that there is room for further declines in interest rates, support for a stable dollar and new-found interest in working out a budget compromise between the White House and Congress. The fed says it stands ready to pump money into the economy.
Former Reagan Administration cabinet member and GM executive Donald Regan, now a commentator, weighs in on the damage control efforts and the market's psyche.
(Part 2) [05:24]
The market meltdown sparks talk of a recession, which President Reagan dismisses, and indeed on the face of things, the economy appears in good shape. Unemployment is at an eight-year low, corporate profits are healthy and the housing boom rolls on. But for those looking for more trouble on the horizon, there's reason to worry about consumer and corporate debt and the twin trade deficits.
(Part 3) [02:38]
Overseas markets play catch up to Wall Street as exchanges from Australia to Japan plunge a day after the crash. Markets in Europe fall again, closing before the U.S. rebound is evident. The chain reaction makes it clear that a global market has emerged.
(Part 4) [01:59]
Amid the doom and gloom, more than a few pundits say "I told you so". The warning signs were there, despite the feel-good factor. As John Chancellor points out in his commentary, there was plenty of reason to be concerned about a country awash in debt and a government run on deficits.
(Part 5) [01:49]