Black Thursday (2020) facts for kids

Black Thursday was a big drop in stock prices around the world. It happened on March 12, 2020. This event was part of a larger period when stock markets fell a lot in 2020. On Black Thursday, stock markets had their biggest single-day fall since a similar event in 1987.

This crash happened just three days after another big fall called Black Monday. Black Thursday was mainly caused by the start of the 2019–20 coronavirus pandemic. People were also worried about how the United States government was handling the situation. This worry grew after the US President, Donald Trump, announced a 30-day travel ban for people coming from many European countries.

What Was Black Thursday?

Black Thursday was a day when the value of many company stocks dropped very quickly. A stock market is like a big marketplace where parts of companies (called stocks) are bought and sold. When the market "crashes," it means these stock prices fall sharply. This can make people lose a lot of money. It also shows that people are worried about the economy.

Why Did Stock Markets Crash?

The main reasons for Black Thursday were:

• The COVID-19 Pandemic: The new coronavirus was spreading fast around the world. This made people worry about businesses closing and the economy slowing down.
• Oil Price War: Two big oil-producing countries, Russia and Saudi Arabia, started selling oil at very low prices. This made the price of oil drop a lot. It hurt oil companies and made investors even more nervous.
• Travel Ban: The US President announced a ban on travel from many European countries. This made people think that the pandemic would get worse. It also made them worry about how much it would hurt businesses like airlines and hotels.

These events made investors lose their confidence. This means they stopped believing that the economy would stay strong. When investors lose confidence, they often sell their stocks. This causes prices to fall even more.

What Happened After the Crash?

After Black Thursday, governments and central banks tried to help the economy. For example, the Federal Reserve Chairman, Jerome Powell, announced that they would cut interest rates. This was done to make it cheaper for businesses to borrow money. The goal was to encourage spending and keep the economy going.

Even with these efforts, the stock market continued to be very unstable for a while. It took time for things to settle down as the world dealt with the pandemic.

Images for kids

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  The Federal Reserve helped the economy by adding more money. This chart shows how much money they added over time.

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  Federal Reserve Chairman Jerome Powell announced lower interest rates in March 2020. This was to help the economy because of the coronavirus.

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  On March 11, 2020, the Dow Jones Industrial Average stock index ended a long period of growth (a "bull market"). It then entered a period of falling prices (a "bear market"). These statues in Frankfurt show a bull and a bear, which are symbols for these market trends.