This is more of a hairsplitting post but with higher interest rates looming people have started drawing comparisons to 1987. As incredibly remote a possibility that a one day 20% decline was, it is even more remote given the nature of trading halts under Rule 80B.
(b) Halts in Trading.
(i) If a Level 1 Market Decline or a Level 2 Market Decline occurs after 9:30 a.m. and up to and including 3:25 p.m. or in the case of an early scheduled close, 12:25 p.m., the Exchange shall halt trading in all stocks for 15 minutes after a Level 1 or Level 2 Market Decline. The Exchange shall halt trading based on a Level 1 or Level 2 Market Decline only once per trading day. The Exchange will not halt trading if a Level 1 Market Decline or a Level 2 Market Decline occurs after 3:25 p.m., or in the case of an early scheduled close, 12:25 p.m.
(ii) If a Level 3 Market Decline occurs at any time during the trading day, the Exchange shall halt trading in all stocks until the primary listing market opens the next trading day.
You can read more on the halts here.
This is not to say that a large interest rate induced panic, much bigger than the one in May, couldn't net out as being a more meaningful event than 1987 but it will trade differently.
I would argue that for the last few years the Fed has been bigger than the market in that intervention or if you prefer, manipulation, has contributed to a great stock market result in the face of a very weak recovery.
For now the Fed is bigger than the market. This raises a few questions. How long can this last? Is it possible that the Fed can engineer some sort of gentle let down in equity prices such that investors won't have a third 50% decline hit them in 15 years? Or are we indeed doomed as some like to tell us?