As the anniversary of “Black Monday” approaches, some on Wall Street are observing it by swapping ominous-looking charts and speculating that one of the most terrifying days in markets history might recur. One could even go as far to say that on social media, some seem eager to relive it, evidenced by a proliferation of viral markets charts, some comparing the stock market’s recent trading action to 1987. Here’s one example from The Market Ear which adheres to a template that caught on following the publication of a column by Bloomberg’s John Authers.
THE MARKET EAR
Authers pointed out that the Nasdaq in 2023 has followed a similar pattern to the Dow in 1987, and that this pattern has also played out in Treasury yields. To be sure, there are plenty of differences between markets today and in 1987. For one, stock exchanges have strengthened circuit-breaker mechanisms in order to prevent major indexes from crashing by double digits during a single session. Here is another: While the S&P 500
has climbed this year in spite of rising yields, the index’s gains have been concentrated in a handful of stocks. Outside of these lucky few, much of the market has lagged or has continued to slide following losses in 2022. Skeptics contend fretful investors are hearing echoes of 1987, while ignoring important differences. “In 1987, the market was more overbought, the October decline before the crash was far more pronounced, interest rates were higher, economic growth and inflation were accelerating, and cyclical sectors were stronger” — all in contrast with the current setup, noted Ed Clissold and Thanh Nguyen, strategists at Ned Davis Research, in a note last week. That hasn’t daunted doomsayers on social media, eager to augur a crash ahead of this year’s anniversary, which falls on Thursday.
On Oct. 19, 1987, the Dow …