Print options

May 05, 2010

US Stocks Plunge As Investors Worry About Greek Debt Crisis

U.S. stock market prices lost nearly one-thousand points Thursday, before trimming the drop to about 350 points, amid reports of erroneous trades, concerns over debt problems in Europe and a tumbling Euro currency.

The bell sounded at the New York Stock Exchange Thursday after the Dow Jones Industrial Average had its biggest intraday loss since a market crash in 1987.

The main U.S. index ended the day at a two-month low of 10,519.

Compounding concerns over Europe, stock officials said there were a number of erroneous trades that also took place on main U.S. indexes.  

The normally stable stock of the consumer goods company Procter and Gamble went down more than 20 dollars on the NASDAQ index, before quickly recovering.  Officials were trying to find out if a technical glitch or a trader error may have caused the plunge.

Other companies also experienced sudden drops in stock value.

Art Hogan, the chief market strategist for the investment bank and securities firm Jefferies, said a close investigation is necessary. "Clearly you do not go down a hundred points at a time, bounce off a low and then come right back. So, you know, there is probably something related to a system problem that is involved in there," he said.

On currency markets Thursday, there was also volatility as the euro dropped in value to $1.26, its lowest level against the dollar since March 2009.

The currency's ongoing drop comes despite a $145 billion aid package reached Sunday for close to bankrupt Greece from the International Monetary Fund and European nations in exchange for sharp cuts in public spending.  But there have been riots in Greece over the measures that are being requested and concerns over the debt situations of other European countries, such as Spain and Portugal.

Hogan says European countries are aggressively tackling these problems, so there should be no cause for panic. "They are going through a process of rescuing countries that need to be rescued. They are making sure, they are getting to a point virtually where they have too much debt and they are not earning enough money, so they have to fix that. One of the ways you have to fix that is the rescue plan they just put in place for Greece. Another way you fix it is watching your currency devalue. Both of those things are happening right now. It is part of the process. It is not the end of the world. This is not the edge of the financial abyss we were in in 2007, in 2008. This is much different. The global economy and the domestic U.S. economy is actually getting better and it's not the time to be panicking," he said.

White House officials said President Obama got regular updates on the situation Thursday as the roller coaster day of stock trading took place.