Any trader watching the stock market today just about needed a shock to the heart as the DJIA – Dow Jones Industrial Average – plummeted almost 1,000 points because of a trading error. The stock market today felt the dive of the DJIA, starting with a huge Proctor and Gamble sell-off. With a “trading error” this huge, is the Citigroup employee going to start looking for new jobs or internet loans?
The DJIA and NYSE drops raise trading error questions
In just a couple of short hours today, because of a trading error, the Dow Jones Industrial Average and New York Stock Exchange both lost almost 1,000 points – nearly 10 percent of their value. Between about 2 p.m. and 3 p.m. today, the plunge triggered worries about market volatility, financial downfall and more in a market already shaky from the economic downturn. Stock futures sales of Proctor and Gamble triggered this major sell-off. What in the world happened?
Trading error to blame for DJIA tumble
Many financial news sources are now saying that the stock market today was reacting to one wrong letter in a trading error. By entering a “b” rather than an “m”, a Citigroup employee sold off billions, not millions, of stocks. It only took 120 seconds for billions of stock futures to sell off.
Citigroup says trading error not its fault
Although they’re launching an investigation, Citigroup has said in relation to the trading error, “At this point we have no evidence that Citigroup was involved in any erroneous transaction”. Whether Citigroup was involved or not, the center of the Dow Jones’ plummet today was definitely the falling Proctor & Gamble stock.
Trading error made worse by electronic trading
In and of itself, the trading error was bad enough to bring the Dow Jones to its knees. Automated training made the NYSE and Nasdaq join within the tumble. While there is nevertheless plenty of stock trading that happens on the floor of the New York Stock Exchange, most trades are electronic, and the majority are automated. Automated trading programs started selling off stocks when the P&G stock began falling. When stocks hit a particular price, these programs right away sold off hundreds of thousands of stocks.
Trading error heightens fear of DIJA fall
Fears of one more financial crisis began with the tumbling of the stock. Riots in Greece and a falling Euro price make other investors very nervous. This trading error certainly is not making any person more confident within the financial industry.
Article Resources
CNBC
http://www.cnbc.com/id/36999483
The Street
http://www.thestreet.com/story/10749060/1/stock-market-crash-or-trading-error.html?cm_ven=GOOGLEN
