- Despite widespread social media predictions of a historic crash, markets show no signs of a Black Monday repeat
- Modern circuit breakers make a 22.6% single-day plunge impossible, as a 20% decline would close US exchanges
- The S&P 500 sits within 2% of its all-time high with earnings growing 29% annually, starkly contrasting the flat earnings and 17.5% pre-crash decline of 1987
On the anniversary of Black Monday 1987, crypto and equity traders braced for catastrophe after viral posts warned of the “worst Black Monday in history” — yet index futures pointed to a Dow open up 0.1%, a far cry from the 22.6% plunge on October 19, 1987. Market commentators racked up millions of combined views by calling for a “stealth” bear market in AI stocks, but the underlying data offered no evidence of an impending crash.
The Dow today sits within 4.5% of its all-time high, and the S&P 500 is within 2% of a record. In 1987, the Dow had already lost 17.5% by the Friday before Black Monday and had crashed more than 10% in the three prior sessions — conditions absent from current markets. Consequently, the comparison collapses under scrutiny.
Portfolio insurance, a mechanical selling mechanism that exacerbated the 1987 crash, no longer exists in that form. Modern stock exchanges employ circuit breakers that trigger a 15-minute trading pause after a 7% S&P 500 decline and close markets entirely after a 20% drop. Meanwhile, the S&P 500 trades at an estimated 26 times trailing earnings — only modestly above the 23.3 multiple at its 1987 peak.
Companies in the index are growing earnings 29% annually, with FactSet estimating a third consecutive quarter above 25% growth. This contrasts sharply with 1987, when earnings were flat to slightly negative in the quarters preceding the crash.
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