An overextended rally: Stocks had more than doubled over roughly two years, raising valuation concerns.
Portfolio insurance and automated selling: Computerized trading strategies designed to limit losses instead accelerated the crash as they triggered cascading sell orders.
Global market interconnection: The crash spread rapidly across international markets in a single trading session, an early demonstration of how tightly linked global markets had become.
Effects
Circuit breakers were introduced to automatically pause trading during extreme single-day volatility, a direct response to how automated selling accelerated the 1987 crash.
No broader recession followed — unlike 1929, the real economy kept growing, demonstrating that a severe market crash doesn't automatically produce a depression.
The Fed's crisis-communication playbook — quickly affirming liquidity support — became a model referenced in later crises.