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Did Trader's Mistake Cause Wall Street's Big Drop?
By
Jen Chung
Published May 6, 2010
Modified May 6, 2010
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By
Jen Chung
Published May 6, 2010
Modified May 6, 2010
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So, that nearly 1,000 point drop in the Dow earlier today? Sure, there are worries about the debt situation in Europe, but the flashback to 2008 could have been due to a trader's error. The Wall Street Journal reports, "Several market watchers said they heard a major firm may have accidentally released an errant program, where a trader accidentally placed an order to sell $16 billion, instead of $16 million, worth of e-minis, the futures contracts tied to equity indexes."
And CNBC says, "According to multiple sources, a trader entered a 'b' for billion instead of an 'm' for million in a trade possibly involving Procter & Gamble, a component in the Dow." Speculation is that a trader from Citigroup made the mistake, but "The bank said it has no evidence of a bad trade but is investigating the situation." Dealbreaker is liveblogging a Citi conference call—"We have not found any info that would lead us to believe we were involved in a technical error."
P&G was trading at around $60 and suddenly fell to $39.37; the WSJ explains, "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."
The Dow closed down 347 points to 10,520.32.
Tagged
citigroup
economy
Procter & Gamble
stock selloff
typo
wall street
Jen Chung
Jen Chung is a former WNYC and Gothamist editor.
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Gothamist is funded by sponsors and member donations
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