Typo may have been cause of market meltdown
Wall Street went into a freefall. But as it turns out, the billions of dollars lost in the markets on Thursday might have been due to a simple typo.
Sources tell ABC News the stock market slide may have been triggered by what was supposed to be a $16 million trade in Procter & Gamble stock. But someone entered it as $16 billion, by mistake.
That sent the Dow Jones average plummeting more than 700 points in just 15 minutes. At one point it was off by almost 1,000.
By the closing bell, prices had recovered somewhat, but the Dow lost 347 points, the Nasdaq 82 points and the S&P 500 dropped 37.
The Dow Jones Industrial Average was already down about 2 percent when it suddenly took a nose dive. Now there's a scramble to figure out exactly what happened.
Traders were already worried about rioting in Greece and concerns about a growing financial crisis there.
But then came what appeared to be a trading error; an order to sell $16 billion instead of $16 million worth of stock in Procter & Gamble, the maker of Ivory Snow and other household products.
That set off a nearly 1,000 point drop in the Dow Jones Industrial Average, the index Procter & Gamble is a part of.
Circuit breakers designed to halt massive swings didn't engage.
"Apparently this fall today just failed to trip them. The amount of the loss just didn't quite trigger the circuit breaker. The timing of the loss didn't quite trip the circuit breaker," Bingham, Osborn & Scarborough wealth manager Ed Osborn said.
Once the mistake was identified, the market bounced back, regaining about two-thirds of the sharp drop.
But the situation in Greece remains a drag on the stock market. Business leaders in San Jose expressed concern that a weaker European economy will hurt U.S. exports.
"If that economy weakens, then our exports from the United States to those countries get more expensive, so the corporations in the United States might see eroding margins and reduced profits because with our stronger currency, it becomes more expensive for those economies to purchase our goods," Wells Fargo Vice President Rob Fernandez said.
Whether it's Greece or a trading error, analysts say it shows a lack of confidence in the economy. And if consumers lack confidence, it could impact spending and the recovery.
"If it's a quick bounce and confidence resumes, then it won't be much of an impact. But in fact if the market stays down for an extended period, then sure, it would have an impact on consumer confidence and on consumer spending," Sean Randolph, Ph.D. from the Bay Area Economic Council said.
So, was there a trading glitch? While we wait for investigators to figure that out, it's interesting to note that the Nasdaq has now cancelled many trades that occurred during that chaotic 20 minutes when the markets plunged. The New York Exchange, though, insists Thursday was no error, and is not cancelling any of its trades.
wall street, economy, europe, european union, business, david louie
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