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Stock Market Crash? Or Trading Error?

(Stock market crash article updated with Friday morning news and additional analysis regarding the causes of the Thursday's stock market crash and rebound.)

NEW YORK ( TheStreet) -- The Dow Jones Industrial Average plunged on Thursday afternoon, as the week-long selloff in the markets took a turn for the worse and began the talk of a stock market crash.

The Dow, which was being celebrated just weeks ago as it made the return to the 11,000 level, was down between 500 points and 900 points in wild Thursday afternoon selling. All the major market indexes were bleeding, with percentage declines over 3% in both the Dow and Standard & Poor's 500 Index on Thursday.

On Friday morning, buoyed by a better than expected monthly nonfarm payroll report from the government, the markets opened positive, even though the Asian markets had fallen overnight -- with Japan offering emergency investment to its financial system for the first time since the Dubai crisis -- and European equities trading down again.

Was the fact that the Dow was down 900 points before it narrowed those losses on Thursday afternoon, ending down a more "modest" 348 points, just a sign that trading machines had run amok in the U.S.?

Stocks including 3M (MMM), Procter & Gamble (PG) and Accenture saw sudden share price free falls that suggest some kind of as-yet unexplained trading error in the markets.

By Late Thursday, the Securities and Exchange Commission was trying to figure out if there was any nefarious trading activity behind the huge Dow drop, while the big exchanges were passing around the blame buck. NYSE Euronext said it was electronic trading that cause the sudden market rout, while Nasdaq CEO Bob Greifield was on CNBC on Friday morning blaming the NYSE for walking away from its role of providing liquidity to the markets, a charge that the NYSE immediately countered.

Regardless, the Greek debt crisis, and the larger fear of a European debt contagion, have roiled the markets all week, so is a stock market crash next, even if the NYSE, or the electronic trading systems, or a shady trading scheme are to blame for the massive V-shaped action in the market's yesterday?

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