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Stocks Face Full Plate Friday After Wild Selloff

NEW YORK ( TheStreet) -- In one of the more remarkable days in recent memory on Wall Street, stocks broke down Thursday afternoon, with the Dow rapidly losing nearly 1,000 points before recovering to close down about 350 points. The wild move, being blamed on a trading error, punished a market already wounded from a European debt overload.

Observers will continue to dissect what happened during Thursday's history-making selloff into the morning and beyond, but they'll also monitor other market-moving items before Friday's opening bell:
  • Parliamentary election results from the U.K.
  • Germany's debate and vote on the Greece rescue measure.
  • The April jobs report from the Labor Department, which is expected to show a pickup in nonfarm payrolls, though the nation's unemployment rate could hold steady at 9.7%.
  • "If we get good news on those three things ... I think this reversal we saw in the last half hour or so might continue at the open," said Phil Orlando, chief equity market strategist at Federated Investors. "We got oversold, stupidly oversold at one point. But even before [the near 1,000-point drop], we were oversold. People were selling on emotion," later adding, "maybe, who knows, we'll actually start paying attention to fundamentals."

    But as quickly as that massive plunge happened around 2:40 p.m. EDT on Thursday, stocks rebounded and recovered off their worst levels. CNBC began speculating that some sort of computer system or human error may have been at the root of the steepest drops. The New York Stock Exchange reported that it saw no error from itsr vantage point.

    Rumors also centered on possible erroneous trades for Procter & Gamble (PG) shares, which imploded in baffling fashion during the accelerated decline.

    By late Thursday, the Nasdaq Stock Market, which also reported no system problems, said it would cancel trades between 2:40 p.m. EST and 3 p.m. EST of "greater than or less than 60% away from the consolidated last print in that security at 14:40:00 or immediately prior." NYSE Arca, the electronic platform of NYSE Euronext, said it would do the same.
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    Erroneous or not, the Dow Jones Industrial Average still lost 348 points, or 3.2%, to close at 10,520, its largest single-day fall since February 2009, as uncertainty from overseas continued to weigh. The S&P 500 shed 38 points, or 3.2%, to 1128, while the Nasdaq lost 83 points, or 3.4%, to 2320.

    At one point, the Dow was down 998.50 points, or 9.2%, and fell to 9,869.62, the blue-chip average's largest intraday decline ever. The Dow also had its highest one-day swing ever -- 1010.14 points.

    Even before the most massive declines of the day, stocks were weaker as eurozone contagion fears picked up again, stoking investors' fears and sending markets roiling for yet another day. Moody's Investor Service said the banking systems in several European nations including Italy, Spain, Ireland, Portugal and Britain could be stung as sovereign debt woes intensify, according to The Associated Press. Those lingering doubts helped put a damper on the euro, as the dollar hit a new 14-month high against the currency.

    Market participants remain skittish about the ramifications from a series of uncertainties coming out of Europe. German legislators are scheduled to vote on the bailout measure Friday, but a report said Germany's Social Democratic Party would shy away from voting in favor of the rescue bill.

    Meanwhile, Greek lawmakers moved to pass a set of austerity cuts today. Just before the most prenounced losses of the day, Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, said pictures of violent protests from outside the parliament building, coupled with the S&P's move below its January high at 1150, was accelerating the sell-off mood in the afternoon.

    "The economic data has been good, but you can throw that out the window now," Detrick said, adding "when emotions run high, even technicals don't matter so much."

    And while uncertainty swirled in the eurozone, the European Central Bank announced it kept its key interest rate unchanged at 1%, as expected. But during a press conference following the announcement, it was widely reported that ECB President Jean-Claude Trichet said central bankers didn't discuss the buying of government bonds as a part of their meeting.

    "Trichet could have shown some leadership this morning," Orlando added. "Whatever. Just announce something bold and demonstrate some leadership. When that didn't happen, that really set the tone for the day."

    "The hopes were that this IMF/German bailout would be the rescue for Greece and the euro currency. But if you look at credit spreads, that's clearly not the case," said Michael Pento, senior market strategist at Delta Global Advisors. "I think this reminds me too much of the summer of 2007 when we first saw the Bear Stearns hedge funds collapse. I think this is the first salvo of a metastasizing sovereign debt crisis that will spread," also saying the contagion could go beyond Europe and into Asia and the U.S.

    "It's a very real crisis," he said. "I'm afraid over the next few years here it's going to come to America. And I guarantee you this -- there is no IMF bailout coming to the U.S."

    Overseas, Hong Kong's Hang Seng lost 1% while Japan's Nikkei shed 3.3%. The FTSE in London fell 1.5% and the DAX in Frankfurt was lost 0.8%.
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