This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

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?

1 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,122.01 +15.31 0.09%
S&P 500 2,000.12 +0.10 0.00%
NASDAQ 4,569.6210 -1.0160 -0.02%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs