Dow Jones falls about a 1000 points

by Manshu on May 6, 2010

in Economy

The big story of the day is the dramatic fall of Dow Jones which shed about a 1,000 points before recovering, and closing just 347 points down. The WSJ has this on the subject (emphasis mine):

At its afternoon low the Dow Jones Industrial Average was down almost 1,000 points, hurt by sharp drops in Procter & Gamble, 3M and other companies that traders said were subject to heavy selling by so-called black boxes, or automated trading systems.

U.S. stocks plummeted on Thursday afternoon in a furious selloff accelerated by automated orders and possible erroneous trades.

Several market watchers said they heard a major firm may have accidentally released an errant program, where a trader accidentally placed an order to sell $16 billion, instead of $16 million, worth of e-minis, the futures contracts tied to equity indexes.

I had no idea such a thing was even possible. I hope we get to know the real reasons behind this because drops like these are quite scary, and even more, if human errors and computer programs cause them.

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