Stocks extend plunge on concerns about Greece
NEW YORK — The stock market had one of its most turbulent days in history as the Dow Jones industrials dropped almost 1,000 points in less than half an hour on fears that Greece’s debt problems could halt the global economic recovery.
The market’s plunge came less than 90 minutes before the end of trading. The Dow’s drop was its largest loss ever during the course of a trading day, but it recovered to a loss of 347 at the close. All the major indexes lost more than 3 percent.
There were reports that the sudden drop was caused by a trader who mistyped an order to sell a large block of stock. The drop in that stock’s price was enough to trigger “sell” orders across the market.
Still, the Dow was already down more than 200 points as traders watched protests in the streets of Athens on TV. Protestors 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.
“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.
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.”
On the floor of the New York Stock Exchange, stone-faced traders huddled around electronic boards and televisions, silently watching and waiting. Traders’ screens were flashing numbers non-stop, with losses shown in solid blocks of red numbers.
The impact on some stocks was enormous although brief. Stock in the consulting firm Accenture fell to 4 cents after closing at $42.17 on Wednesday. It closed at $41.09, down just over $1.
NYSE spokesman Raymond Pellecchia said the plunge wasn’t caused by a problem with the exchange’s trading systems. The Nasdaq Stock Market said it was reviewing its trades with other trading networks.
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 two-thirds of that amount but still had its biggest point loss since February 2009.
The Dow has lost 631 points, or more than 5 percent, in three days amid worries about Greece. That is its largest three-day percentage drop since March 2009, when the stock market was nearing its bottom following the financial crisis.
The losses were so widespread that just 173 stocks rose on the NYSE, compared to 3,008 that fell. The major indexes were all down more than 3 percent.
Meanwhile, interest rates on Treasurys soared as traders sought the safety of U.S. government debt. The yield on the benchmark 10-year note, which moves opposite its price, fell to 3.4 percent from late Wednesday’s 3.54 percent.
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