Tags: US | Wall | Street

Dow Falls Nearly 1,000 Points Before Rebounding

Thursday, 06 May 2010 03:01 PM

It was a painful flashback to the darkest days of 2008:

The U.S. stock market had one of its most turbulent days ever. The Dow Jones industrials plunged nearly 1,000 points in half an hour amid concerns that Greece's debt problems could halt the world financial recovery.

The Dow managed to recover two-thirds of its losses and closed down 347.80 points, or 3.2 percent, at 10,520.32. But all the major indexes lost 3 percent in a day that recalled the market turmoil of the 2008 financial crisis.

There were reports that a technical glitch hastened the selling.

Even so emotions, were running high. Traders are concerned that Greece's economic problems will hurt other European countries and ultimately, the U.S. recovery.

The Standard & Poor's 500 index was off 37 at 1,128. The Nasdaq composite index was off 82 at 2,319.

Only 173 stocks rose on the New York Stock Exchange while 3,002 fell. Volume came to an extremely heavy 2.57 billion shares.

Meanwhile, traders watched protests in the streets of Athens on TV. Protesters raged against austerity measures passed by the Greek parliament.

But traders were not comforted by the fact that Greece seemed to be working towards a resolution of its debt problems. Instead, they focused on the possibility that other European countries would also run into trouble, and that the damage to their economies could spread to the U.S.

Computer trading intensified the losses as programs designed to sell stocks at a specified level kicked in. Traders use those programs to try to limit their losses when the market is falling. And the selling only led to more selling as prices fell.

"I think the machines just took over. There's not a lot of human interaction," said Charlie Smith, chief investment officer at Fort Pitt Capital Group. "We've known that automated trading can run away from you, and I think that's what we saw happen today."

There were reports that a technical glitch hastened the selling. Stock in the consulting firm Accenture fell to 4 cents after closing at $42.17 on Wednesday. It was priced at about $41 in the last half-hour of trading.

New York Stock Exchange spokesman Raymond Pellecchia said he was unaware of any problems with the exchange's trading systems but was looking into whether an error occurred.

Even if there were technical issues, emotions about the world economy were running high. Down 998.50 points in its largest point drop ever, the Dow recovered to a loss of 505 in a short time.

"The market is now realizing that Greece is going to go through a depression over the next couple of years," said Peter Boockvar, equity strategist at Miller Tabak. "Europe is a major trading partner of ours, and this threatens the entire global growth story."

The stock market has had periodic bouts of anxiety about the European economies during the past few months. They have intensified over the past week even as Greece appeared to be moving closer to getting a bailout package from some of its neighbors.

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It was a painful flashback to the darkest days of 2008: The U.S. stock market had one of its most turbulent days ever. The Dow Jones industrials plunged nearly 1,000 points in half an hour amid concerns that Greece's debt problems could halt the world financial...
US,Wall,Street
505
2010-01-06
Thursday, 06 May 2010 03:01 PM
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