Daily News

Cause of stock plunge a mystery

May 10, 2010 - What caused Thursday’s frenetic sell-out of stocks remains a mystery at this time. Point of focus was a possible computer glitch that precipitated rapid fire computer trading.

The trigger was a big Procter & Gamble order to sell. In minutes, a nervous market plunged. The Dow immediately lost an additional 580 points in just seven minutes. At the time the sudden drop happened, the Dow had already lost about 350 points; the additional drop dragged down the total to 998.5 points.

The 998.5 point drop was the worst intraday loss ever. The Dow recovered before the close of trading day and settled on a deficit of 348 points. Still the 348 point drop was the worst in 15 months.

When the smoke cleared the next day, numbers stood at 10380.43 points after a four-day loss of 771.40 points.

The Dow Jones Industrial Average represents the value of 30 blue chip companies. General Motors, Exxon, IBM, Good Year are among the companies that make up the index. In last week’s plunge, Procter and Gamble fell 37% and 3M 22%.

Over at Nasdaq, losses were registered at 54 points (2.3%) its lowest in two months. Nasdaq which is a short for National Association of Securities Dealers Automated Quotations is the second largest stock exchange in the United States next only to the New York Stock Exchange. It contains over 3,000 publicly traded companies among them some of the world’s largest technology companies such as Microsoft, Amazon, Apple, Cisco eBay, Google, Intel and Sun.

Last week’s erratic stock performance pushed up the price of gold as investors threatened by the deepening Greek crisis sought a dependable haven for their investment.

According to Peter Spina, president of Gold Seek LLC, “fear has started to come back... and that’s definitely something that benefits the gold market.”

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Stewart Lawson

Senior Staff Writer - Gold-Investment.info