QUOTE BOX: Recollections of the 1987 crash
NEW YORK (Reuters) - Twenty years ago, U.S. stock markets suffered a gut-wrenching plunge still remembered as "Black Monday" on Wall Street.
The Dow Jones industrial average .DJI fell 508 points, then a record. The 22.6 percent one-day drop still stands as the biggest percentage loss since the New York Stock Exchange reopened in December 1914 after being shut for four-and-a-half months in the run up to World War I.
The broader Standard & Poor's 500 index .SPX fell 20.4 percent while the Russell 2000 index .RUT of small caps dropped 12.5 percent. Both are records still.
For those on hand, either in the market or watching and reporting on it, memories of the day remain vivid.
Following are some recollections of those on hand.
MARTHA CID, THEN A MANAGER OF MEDIA RELATIONS FOR THE NEW YORK
STOCK EXCHANGE:
"We were inundated with calls from reporters all over the country and all over the world and it was really more than we could handle. Tom Brokaw called, whereas before Tom Brokaw would never be on the phone. There was a lot of interest from Japan and many foreign journalists who were normally assigned to the United Nations were re-deployed to cover Wall Street.
"Reporters were under pressure because their editors were looking for stories. People were looking for answers, there was a tremendous amount of uncertainty, and there wasn't a lot of information. Reporters wanted historical data. They wanted to know about other stock market drops. That's why we decided to have a press conference. We held a press conference at 4 o'clock in the Board Room on the sixth floor of the Stock Exchange and it was standing room only.
"We had that gallery overlooking the trading floor. We had dozens and dozens of requests from media to bring cameras -- still photography and TV. In those days you could get a sense of the market from the activity on the floor. You could look on the floor and see all the litter from the buy and sell slips and also you could hear the noise level.
"During the day, Torrenzano and John Phelan were in touch with the White House and with the Fed. It was clear that this was history in the making."
CAL MANKOWSKI, REUTERS JOURNALIST:
It became my job that day to report from the New York Stock Exchange while colleagues worked the telephones to get the story of the market's freefall.
One memory that stands out after 20 years is that of a news conference in the NYSE board room that started 15 minutes after the end of trading. About 250 reporters, photographers and television technicians gathered in the large room, not to mention some top Wall Street executives who wanted to hear first-hand what John Phelan, then NYSE chairman, would say.
In response to a question, Phelan said it was the closest thing to a "financial meltdown" that he would ever want to see. His comments were broadcast live by ABC News and the Cable News Network. CNBC had yet to make its debut.
Months earlier Phelan had warned in a published article that new financial products were fueling a rise in stock prices, and that there was potential for a rapid reversal of the gains.
The product was so-called portfolio insurance, a system for using stock index futures that would increase in value as the market drops.
"People who manage big sums were convinced they didn't have to worry about the market dropping," recalled John Bachmann, senior partner at St. Louis financial services firm Edward D. Jones & Co. and at the time chairman of the Securities Industry Association, a trade group.
Jeff Hearn was just a few years into his career and working in an E.F. Hutton brokerage office in Florida. He recalls that with no CNBC and no Internet, people were slapping their quote machines to make sure the numbers they were seeing were real.
"None of us at the time had any view, or sense, that you could see that much of a decline in one day," he said.
CHRIS RUPKEY, WHO WAS AN ECONOMIST AT MCM MONEYWATCH:
"It felt like the world was ending.
"It was almost like being caught in an earthquake where you're half in shock. There's a sense of incredible disbelief.
"You looked at the number -- down 508 points in a day -- and it was just unbelievable at that time.
"Fewer Americans had money tied up in the equity market back then. 401K retirement accounts weren't as prevalent as they are today. Baby boomers hadn't amassed as much wealth. If that were to happen today -- the stock market losing more than 20 percent of its value in a day -- it would be truly frightening because more people are invested.
"We were all stunned. I think we had about 20 people in the main room where we were sending out information to the dedicated boxes. (optional services offered on Telerate).
"Down 508 points from the 2200 level was dramatic -- the market fell 22.6 percent. Almost a quarter of the wealth of the stock market in one day. For our generation, it was unprecedented.
"The drop spawned a lot of forecasts that the economy was going into recession.
"The Fed provided liquidity so much liquidity through open market operations that the federal funds rate fell 100 basis points after the crash.
"It was kind of quiet in the room. There's not a lot to say when something of that magnitude hits. In a way it was comparable to 9-11 when people just stop trading and stare."
