The Dow Jones Industrial Average plummeted by 22. Herd behavior led many investors to sell regardless of fundamentals, exacerbating the decline.
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It remains a pivotal case study in finance textbooks, illustrating the limitations of existing models and the role of human psychology in market dynamics. Immediate Market Impact The immediate impact was a global cascade of sell-offs, with major indices in Europe and Asia following the sharp drop in New York.
8% DAX (Germany) 16. Circuit breakers were introduced to halt trading temporarily during severe declines, providing a cooling-off period for investors.
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6% S&P 500 20. This event also spurred academic research into volatility clustering and the predictability of market crashes, shaping contemporary financial theory.
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