A single day of panicked trading had just wiped out one-fifth of the U.S. market's value, a troubling reminder to investors of the stock market crash decades earlier that ushered in the Great Depression.
"The worst day ever on Wall Street," anchor Tom Brokaw proclaimed on the NBC Nightly News. "It is a day that will be in bold print in history books: Black Monday, Oct. 19, 1987, when the stock market went into a free fall, losing more in one day than it did on Black Tuesday in 1929."
A few days later, President Ronald Reagan dismissed the drop as a "long overdue correction" and said there was no reason it should lead to a recession. History proved him right: There was no recession, although it took more than a year for slow but relatively steady gains to push the markets back to pre-crash levels.
Investors may take some comfort from that, since the period is an apt analogy for what's happening in financial markets today and the potential effect on the U.S. economy, says Fred Cannon, head of research at investment banking firm Keefe, Bruyette & Woods.
While not optimal, perhaps, it's far more optimistic than 2008, the period when bad mortgage loans sparked a financial crisis that wiped out more than a third of the market's value and led to massive government bailouts of finance companies.
Consider that in 1987, Black Monday's 500-point drop took the Dow to a trough. It didn't sink that low again, and in fact, ended the year 2.3% higher than its 1986 close.
New Year's Eve 2008, on the other hand, saw the index 33% lower than the year before; it didn't match or top its 2007 close at 13,264 for another five years.
Unlike the fall of 1987, "we haven't had a big one-day move, but certainly the big drop since the beginning of the year" is reminiscent, Cannon said in a telephone interview.
It's common, he said, for investors to analyze a large drop in stock prices through the lens of the most recent similar event, but that can cause them to overlook large differences in underlying economic reality.