Dow Drops almost 1,000 points rebounds to just down 300 due to glitch.


barkomatic

macrumors 601
Aug 8, 2008
4,027
1,798
Manhattan
This came as a total shock to me today when I read the reports. I had no idea the market had been down that much at one point. Everyone is saying its a knee jerk reaction though.

The Greek parliament passed the austerity measures necessary to get the aid despite the self centered protests of its unions. I guess the only question is will the EU be able to help Portugal or Ireland in the same fashion should the need arise.

While I generally support a public safety net for people in times of crisis, the welfare and retirement programs in many European countries are ridiculously excessive and couldn't be sustained.
 

mcrain

macrumors 68000
Feb 8, 2002
1,768
11
Illinois
I hope my wife understands that my deep plunge was an overreaction to a mental glitch and she won't get too mad at me...
 

Desertrat

macrumors newbie
Jul 4, 2003
2
706
Terlingua, Texas
"To err is human. To really screw up requires a computer."

There was a comment in a Bloomberg article to the effect that investors were running from risk, and not following the fundamentals. Fundamentals? Ya gotta be smoking some funny stuff to think the fundamentals have been driving the market!
 

obeygiant

macrumors 601
Jan 14, 2002
4,003
3,776
totally cool
Combine one part nervous traders, one part Greek crisis and one part trader error. Stir in one part central bank complacency. Bring to boil. Panic.

That combination produced one of the wildest days ever in financial markets, with the Dow Jones industrial average at one point down almost 1,000 points while the euro sank to its lowest level in more than a year, The New York Times’s Floyd Norris reports in his High & Low Finance column. There were substantial declines in emerging markets whose economies had seemed to be booming and in developed markets fearful of renewed recessions.

Even though a substantial part of the worst plunge appeared to be linked to a trader error — one $40 stock fell for a time to one penny — prices had fallen around the world before such mistakes began to occur.

It appears that investors are again growing more hesitant to own assets such as stocks and bonds, particularly since many now cost far more than they did only a few months ago. Another sharp retrenchment by investors, consumers and businesses could threaten the current global recovery by choking off financing and new orders for companies.For much of the past 14 months, the prices of risky assets around the world have been rising rapidly. That recovery, from lows reached in March 2009 amid talk of a new Great Depression, both reflected and encouraged a revival in economic activity. Manufacturers in most countries this week reported rapidly growing order books.

The most recent recession was made in America, and to a large extent it was unmade here as well. If it was the subprime mortgage market and other credit excesses that sent markets reeling, it was also a willingness of the American government, including the Federal Reserve Board, to plow money in when fears were at their highest that helped to bring those markets and economic activity back.

For the past several months, worries have been alternately rising and receding that the next crisis would be made in Europe, where Greece has faced the possibility of default. Europe and the International Monetary Fund have announced plans for a bailout, but there have also been riots in Greece amid anger over the steep budget cuts being forced on the country.

On Thursday, Jean-Claude Trichet, the president of the European Central Bank, said at a news conference that the bank’s governing council had not even discussed the possibility of purchasing government bonds. That was taken as a disappointment by some traders, who had hoped the E.C.B. would follow the Fed’s lead in spreading liquidity around if conditions grew worse.

Instead, fears are growing that Europe, which is worried that Greece could be followed by Portugal and Spain, will follow the pattern laid down by the United States government in 2007, when officials offered frequent reassurances that the subprime mortgage problem was “contained,” but delayed in taking the bold action that finally did stop the panic.

The height of panic on Thursday was reached shortly after lunchtime in the United States. First some currencies began to fall rapidly, with the euro suffering especially against the Japanese yen. That could be an indication that some large traders are unwinding positions. It has been popular to borrow yen at very low interest rates and then use the money to speculate in higher yielding assets denominated in other currencies. Anyone unwinding such a trade would buy yen to repay the loan.

Then, within a few minutes, the American stock market appeared to be collapsing. Some of the decline was real, but another part of it was simply trading gone awry. Temporary plunges in the price of Procter & Gamble and 3M, the former Minnesota Mining and Manufacturing, cost the Dow about 300 points, and appeared to be the result of glitches, not intentional sell orders. Similarly, Accenture, a large consulting firm, fell from over $40 a share to one penny.

By the close of the day, the Dow was down 347.80 points, or 3.2 percent, to 10,520.32.

There were also substantial declines in most major European and Asian indexes. In Greece, however, the stock market put on a small rebound after falling to a 13-month low on Wednesday.
link

Was the decline only due to a glitch? There could be more to it.
 

opinioncircle

macrumors 6502a
May 17, 2009
500
0
I may be the only one feeling this way, but it proves to me that the whole index, whether Nasdaq or Dow Jones is major fluff and represents nothing at all..This to show that people's lives are at stake over some random numbers representing absolutely nothing.
 

Counterfit

macrumors G3
Aug 20, 2003
8,202
0
sitting on your shoulder
I wish I could remember who it was, but someone famous-ish (it may have been Jon Stewart, or one of his guests) described the stock market as a group really smart and rational people behaving irrationally. Or something like that.
 

rasmasyean

macrumors 6502a
Jul 11, 2008
810
1
It's obviously a "purposeful" glitch. They just haven't been able to prove it.

In this age, after all the steps they've taken to correct "programmed trading" and such since the first incident ages ago...

Someone has got to have made a lot of money on that timed blip.

What I'd be worried about is trying to find loophole's for ppl to manipulate the market and patch them before it does some real damage next time.