Stop the Machines! Save the Dow: Today's Outrage

Machines attacked the Dow and sank the stock markets. There's no other explanation for what happened on the U.S. exchanges today.
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NEW YORK (TheStreet) -- Machines attacked the Dow and sank the stock markets today.

There's no other explanation for what happened on the U.S. exchanges. Only machine trading could shave almost 1,000 points from the Dow Jones index in less time than the typical hard-working American takes for lunch.

Even if a human set it all in motion with a so-called "fat-finger error" (that's the scuttlebutt at the moment) -- automated trading is the only explanation for how one person's mistake could become everyone's problem.

No human could have traded so fast and furiously to cause such a stupendous stock market collapse. Thankfully, humans were able to regain control and the Dow closed only 347.8 points lower.

No one really knows what happened yet, but there is lots of chatter about something going wrong in the system. Some look at the precipitous drop in

Procter & Gamble

(PG) - Get Report

shares -- the stock dropped as low as $39.37 before recovering to $60.75, a 2.3% decline.

But we also saw panic selling in

General Electric

(GE) - Get Report

, which closed 4.3% lower,

Citigroup

(C) - Get Report

, which lost 3.4%,

Bank of America

(BAC) - Get Report

, down 7.1% and

Ford

(F) - Get Report

, which ended the day 4.5% lower.

Citi shares

showed massive volume of trading, followed by Bank of America, Ford and GE.

I can only hope that retail investors didn't get caught up in all the madness. The machines moved so quickly that hopefully mainly institutional investors took a hit. Perhaps that's fair, since the institutions invented the machines.

But as one reader pointed out, many retail investors may have been harmed by stop loss orders intended to protect them from declines. These automated trades -- made by machines -- sell at a preset limit and can't deal with a situation like today when stocks sink and rebound in the blink of an eye.

Think we'll be revisiting the issue of high-frequency trading now?

You bet we will.

--Written by Glenn Hall in New York.

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Stock Market Crash Led by Machines

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