NPR logo DJ Avg Plummets Nearly 1K Points, Then Rebounds


DJ Avg Plummets Nearly 1K Points, Then Rebounds

Updated at 3:50 pm ET — CNBC just reported sources are telling it that a trading error, a human error, at a major firm, (the trader typed in "b" instead of "m") caused the Dow Jones to fall through the 10,000 floor. A CNBC reporter said that it appears it was a financial derivatives trade. If this turns out to true, there will be a lot of gnashing of teeth over this one.


Updated at 3:25 pm ET — The nearly 1,000 point drop in the Dow Jones Industrial Average before it regained some of the lost ground jangled even the strongest nerves Thursday, with a number of reasons being offered for the decline.

Much blame was being attributed to the crisis in Greece on the same day that nation's Parliament approved an austerity package meant to reduce the nation's debt. The new measures of pay cuts and freezes for public workers, conditions Greece had to agree to in order to get nearly $150 billion in loans from the IMF and the Eurozone nations, have led to mass protests and violence in Athens.

But there were also reports that Procter & Gamble, a component of the DJIA, may have contributed to the sell-off. CNN talked with Ted Weisberg of Seaport Securities. Weisberg said P&G fell 30 points on a regional market and that volatility fed into the Dow.

Meanwhile, some observers suspected a computer glitch somewhere in the system might have explained the dramatic decline. But the New York Stock Exchange said there were no computer system errors behind the dramatic decline.

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The Dow Jones Industrial Average fell more than 900 points but has reversed itself and come back a few hundred points in the last few minutes.

The Dow flirted with territory below 10,000 before it snapped back.

From The Wall Street Journal:

Stocks plummeted in a flashback to the panicked trading of 2008. Investors fled everything from stocks and risky bonds and poured money into safe assets such as U.S. Treasurys.

Stocks began the day in negative territory though took a sharp dive south in the afternoon as selling built up and some indexes fell through key technical levels, sparking new waves of selling, investors said.

As losses piled up, the Dow Jones Industrial Average plunged more than 900 points. Key short-term credit markets — such as the market for three-month Libor - began to show signs of stress and corporate bonds tumbled. The Dow was recently down 650 points.

The S&P500 tumbled more than 6%.

Credit markets, too, are beginning to show signs of stress. Three-month Libor, the benchmark rate for billions of dollars in debt, shot to 0.42 percentage point from 0.37 percentage point, traders said. Corporate bond indexes also tumbled.

"It's getting pretty ugly out there very fast," Guy Lebas, chief fixed income strategist at Janney Montgomery Scott. "There are definitely some major concerns that are escalating this afternoon,"