Trading system glitch adds to fears of market correction

08:36, May 10, 2010      

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An unprecedented sharp market plunge gripped Wall Street and sent investors into panic Thursday. While it is widely agreed that an electronic trading system glitch triggered the heavy sell-off, the market, in a broader picture, may have already been set for a correction long overdue.

"It is a bit of craziness, it is an over panic situation," David Henderson, a veteran trader at the New York Stock Exchange (NYSE), told Xinhua. "(I have seen) nothing like this," he said.

According to Dow Jones Indexes, the crazy moment hit at 14:47:25 ET Thursday afternoon, when the Dow dropped 998.5 points, or 9.19 percent, to below 10,000 points. It was the index's biggest intra-day point plunge ever, and the largest percentage intra-day loss since the market crashed on October 19, 1987, when the index closed 22.6 percent lower.

Speculation of bad trades emerged in the market as many traders suspected a glitch in the trading of Dow component Procter & Gambles played a role in the heavy selling. Many media reports have confirmed with their sources that one trader typed "b" instead of "m" in the unit million while trading P&G stocks.

P&G shares plunged as much as 36.7 percent to 39.37 dollars before rebounding to close at 60.75 dollars, 2.3 percent lower. Similar things happened to 3M, another Dow component.

The Securities and Exchange Commission issued a statement saying regulators were reviewing what happened and "working with the exchanges to take appropriate steps to protect investors."



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