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Today’s stock drop was partially triggered by a technical mistake…Not the market…..

A trader talks on his mobile phone outside the New York Stock Exchange on Thursday.

[ A trader works the phone OUTSIDE the Market  ]

Sometimes a mistake is magnified by a little panic….

This time the situation in Greece  was the underlining one….

But a mistake that showed the market that several stocks where down to pennies added to the selling dive that caused the market to halt trading…..

The market ended up only down 300 points instead of the 1,000 points it was for a while during the day…..

From the New York Times…..

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 have been an indication that some large traders were unwinding positions. It has been popular to borrow yen at 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 United States 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, cost the Dow about 300 points, and appeared to be the result of errors, not intentional sell orders. Similarly, Accenture, a large consulting firm, fell from more than $40 a share to one penny.

From the Wall Street Journal.….

The Securities and Exchange Commission and the Commodity Futures Trading Commission said they were working with other regulators to review “unusual trading activity.” The major U.S. stock exchanges said they were looking for trading glitches and examining potentially erroneous trades in multiple stocks. Major exchanges said they will cancel erroneous trades that occurred during the selloff.

Multiple stocks, ranging from Accenture PLC to Boston Beer Co., momentarily lost nearly 100% of their value, changing hands for just one penny. Exchange-traded funds, which are index funds that trade like stocks on exchanges, were also temporarily vaporized. The $9.5 billion iShares Russell 1000 Value Index Fund went from $59 to around 8 cents in the blink of an eye.

“It happened so quickly, it was like a torpedo,” said Scott Redler, chief strategic officer at T3 Capital Management, a hedge fund. “It was mayhem.”

Unnerved traders frantically searched for an explanation, scouring the trade blotters for clues to the cause. Many pinned the blame on an erroneous trade for a basket of stocks which caused shares for companies such as Procter & Gamble Co., one of the market’s most stable blue-chip stocks, to fall 35% in two minutes.

The market was already down some 500 points when the selloff began. Televisions showed images of standoffs between Greek police and protesters, and the European Central Bank declined to step up its effort to stabilize government debt markets.

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May 6, 2010 - Posted by | Blogs, Breaking News, Computers, Government, Media, Other Things, The Economy, Updates | , , , , ,

3 Comments »

  1. […] This post was mentioned on Twitter by James Finley. James Finley said: Today's stock drop was partially triggered by a technical mistake…Not the market…..: http://wp.me/pAL4p-2I9 […]

    Pingback by Tweets that mention Today’s stock drop was partially triggered by a technical mistake…Not the market….. « PoliticalDog101.com -- Topsy.com | May 6, 2010 | Reply

  2. I am very grumpy this AM.

    There is no reason to panic!

    But there is a reason to put on a dress.

    Because their are not enough life boats!

    290,000 new jobs and unemployment goes up!

    And 66,000 were part time Census jobs.

    Were the rest lawn service jobs?

    And yesterday did a “Market Maker” step out to go to the powder room and was not there to catch the ball thrown by another “Market Maker” or has the HAL 9000 computer from 2001 A Space Odyssey found a new job?

    Is this chicken little or the boy who cried wolf? Or better yet the boy who got paid off by the wolf, ate the chicken, and then said nothing. We can believe Goldman Sachs, can’t we?

    This shows that the market has no real legs and if this was a mistake either it happened accidental on purpose or was a blessing in disguise.

    When you let people buy homes that are over their heads or if your Europe and let someone into the club who has no business being there the term “There goes the neighborhood!” applies.

    And is someone is laughing all the way to the bank?

    Shorty Shorts the Circus bear is!

    Real crisis or not, I think Congress might want to smell the coffee because we may not have a depression, we may have a manic depression and people may start doing stupid things like pulling out their funds!

    Comment by Manila Calling! | May 7, 2010 | Reply

  3. All at once….

    Remember those cool stop-loss things on Wall Street? Just dump everything on a certain level?

    Comment by talkandpolitics | May 7, 2010 | Reply


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