Black Monday 1987 was the first U.S. stock-market crash widely linked to the use of computerized trading strategies.
On October 19, 1987, the Dow Jones Industrial Average fell 22.6%, its greatest one-day percentage decline. Analysts associated part of the selling pressure with portfolio insurance, a computerized strategy designed to reduce risk by selling futures as markets fell. Once prices dropped, automated orders could add further downward pressure.
The phrase “first” needs careful interpretation. Computers had been used in finance before 1987, and the crash had multiple causes, including international market weakness, valuation concerns and disputes over monetary and trade conditions. It is more accurate to say that Black Monday was the first major crash in which computerized program trading became a central public explanation.
The episode led to reforms in market infrastructure. Exchanges introduced circuit breakers that pause trading after unusually large moves, and regulators examined links between stock and futures markets. The 2010 Flash Crash later made algorithmic trading an even more prominent concern, but Black Monday established the earlier landmark.