Weird market behaviour today, with the DJIA down almost 10% (approximately 1000 points) at one point. As MarketWatch reports, it appears that some of the decline was due to trading errors:
The U.S. stock market's rapid freefall Thursday afternoon was accelerated by program trading, which was triggered after a sharp drop in shares of Procter & Gamble and at least one other Dow stock, 3M Co., market watchers said.
Shares of Procter & Gamble plunged to $39.37 from around $60. The New York Stock Exchange said each stock has its own circuit breaker level. When these stocks fall below their levels, then they can be traded on any other exchange or platform at any price. When P&G fell below its circuit breaker, a bid came in for the stock at $39.37 from the Nasdaq, the NYSE said.
###Several market watchers said they heard a major firm may have accidentally released an errant program, where a trader accidentaly placed an order to sell $16 billion, instead of $16 million, worth of e-minis, the futures contracts tied to equity indexes.
###Traders also also noticed errant trades among exchange-traded funds, including the iShares Russell 1000 Value Index Fund (IWD), which dropped from close to $60.00 to 7.5 cents.
In a seperate story, NYSE said there weren't any erroneous trades. It looks like those ridiculously low prices seen for shares of P&G, MMM, and IWD, were quotation errors.
If you are a newbie like me, you always learn something new every day: I never knew that individual stocks have circuit breakers on them. It's not clear if it's just for Dow components or any NYSE-listed security (anyone know?) Tags: commentary