The U.S. market crisis that began in October 1987 and prompted a Federal Reserve liquidity pledge was Black Monday.
After the worldwide sell-off on 19 October 1987, Federal Reserve Chair Alan Greenspan issued a statement that the central bank stood ready to serve as a source of liquidity to support the economic and financial system. The announcement helped reassure markets that payment and credit channels would remain available.
The Federal Reserve did not prevent the initial collapse, and the causes of the crash remained broad. Overvalued shares, macroeconomic concerns, international trade disputes, and computerized trading all contributed to the extreme selling pressure.
Black Monday is sometimes confused with the Black Monday label applied to other historical market declines. In the United States, the term most commonly refers to 19 October 1987, the day of the Dow’s largest one-day percentage fall.