Friday the 13th mini-crash

The Friday the 13th mini-crash was a stock market crash that occurred on Friday, October 13, 1989. The crash - referred to by some as "Black Friday" - was apparently caused by a reaction to a news story of the breakdown of a $6.75 billion leveraged buyout deal for UAL Corporation, the parent company of United Airlines. When the UAL deal fell through, it helped trigger the collapse of the junk bond market. The deal unraveled because the Association of Flight Attendants pulled out of the deal when management, in negotiations over an Employee Stock Ownership Plan (ESOP) designed to fund the leveraged buyout, refused to agree to terms.[1]

The closeEdit

Moments after the UAL deal fell through, the indices began their plunge. By the time the closing bell rang, the Dow Jones Industrial Average was down 190.58 points, or 6.91 percent, to 2,569.26. The NASDAQ Composite shed 14.90 points, or 3.09 percent, to 467.30, and the S&P 500 Index fell 21.74 points, or 6.12 percent, to 333.65. The Dow Jones Transportation Average fell 78.05 (5.26%) on the 13th, and fell another 102.04 (7.26%) on the 16th for a total decline of 12.13%. The major indices had closed at all-time highs as recently as Monday, October 9.


Many investors were left stunned. Since most market participants blame the UAL deal as the culprit, survey researcher William Feltus and Robert Shiller, the author of Irrational Exuberance, conducted a telephone survey of 101 market professionals in the business days following the crash, asking if they had heard about the UAL news before or after the crash. 36% surveyed said they had heard about it before the losses set in, and 53% said afterwards.

The market professionals also believed that the UAL story was just an attention grabber, with traders trying to find a reason to sell. Fifty percent believed that was the reason while 30 percent believed the news would reduce future takeovers.[2]


The crash is often pinpointed as the start of the early 1990s recession, although it is considered that the surprisingly low growth rates (almost zero percent) during the summer months and the savings and loan crisis earlier in the year had triggered the crisis almost concurrently with the mini-crash, which in turn got blamed by the public (with the memory of the 1987 crash still fresh) as the true culprit of the recession.

See alsoEdit


  1. ^ Borer, David A. (1995). "Doing Battle: Flight Attendant Labor Relations in '90s". In Darryl Jenkins (ed.). Handbook of Airline Economics. Aviation Week Grp., Div. of McGraw-Hill. pp. 563–566. ISBN 0-07-607087-5.
  2. ^ Harvard International Review - Exuberant Reporting Media and Misinformation in the Markets Archived 2006-09-01 at the Wayback Machine