Issue link: https://www.epageflip.net/i/10172
6A – Daily News – Friday, May 7, 2010 NEW YORK (AP) — The stock market had one of its most turbulent days in history as the Dow Jones industrials fell to a loss of almost 1,000 points in less than half an hour on fears that Greece’s debt problems could halt the global economic recovery. The market’s plunge came less than 90 minutes before the end of trading. The Dow’s drop was its largest loss ever during the course of a trading day, but it recovered to a loss of 347 at the close. All the major indexes lost more than 3 percent. There were reports that the sudden drop was caused by a trader who mistyped an order to sell a large block of stock. The drop in that stock’s price was enough to trigger ‘‘sell’’ orders across the market. Still, the Dow was already down more than 200 points as traders watched protests in the streets of Athens on TV. Protestors raged against austerity measures passed by the Greek parliament. But traders were not com- forted by the fact that Greece seemed to be working towards a resolu- tion of its debt problems. Instead, they focused on the possibility that other European countries would also run into trouble, and that the damage to their economies could spread to the U.S. The Dow fell 998.50 points in its largest point drop ever, eclipsing the 780.87 it lost during the course of trading on Oct. 15, 2008, during the height of the financial crisis. The Stocks plunge; Dow has record drop, then recovers Wall Street Dow closed that day down 733.08, the biggest closing loss it has ever suffered. The Dow has lost 631 points, or 5.7 percent, in three days amid worries about Greece. That is its largest three-day percent- age drop since March 2009, when the stock mar- ket was nearing its bottom following the financial cri- sis. ‘‘The market is now realizing that Greece is going to go through a depression over the next couple of years,’’ said Peter Boockvar, equity strategist at Miller Tabak. ‘‘Europe is a major trading partner of ours, and this threatens the entire global growth story.’’ The stock market has had periodic bouts of anx- iety about the European economies during the past few months. They have intensified over the past week even as Greece appeared to be moving closer to getting a bailout package from some of its neighbors. Computer trading intensified the losses as programs designed to sell stocks at a specified level kicked in. Traders use those programs to try to limit their losses when the market is falling. And the selling only led to more selling as prices fell. The selling was furious: At 2:20 p.m. EDT, the Dow was at 10,460, a loss of 400 points. It then tumbled 600 points in seven minutes to its low of the day of 9,869, Dr. Andrew PomazalD.O. Physician & Surgeon General Medicine Saturday Appointments Available • High Blood Pressure • Diabetes • Joint & Muscle Pain • Lung Problems We offer Osteopathic Manipulation 530 528-2066 2050 Main St, Red Bluff Accepting New Patients PAID POLITICAL ADVERTISEMENT FOR JUDGE OF THE SUPERIOR COURT OFFICE TWO, 2010 William Murphy Experience and Temperament Count Paid for by the committee to elect William Murphy WilliamMurphy4Judge.com 30 years experience as an attorney including 23 years as a public servant has given Will Murphy the judicial perspective that long and diverse experience brings. the best possible price on shares. The programs are often set up in advance and allow computers to react instantly to moves in the market. When a stock index drops by a big amount, for example, computers can unleash a torrent of sell orders across the market. They move so fast that prices, and in turn indexes, can plunge at the fast pace seen Thursday. The Dow recovered two-thirds of its loss Thursday. It closed down 347.80, or 3.2 percent, at 10,520. That was its biggest point loss since February 2009. The Standard & Poor’s a drop of 9.2 percent. By 3:09 p.m., the Dow had regained 700 points. It then fluctuated sharply until the close. ‘‘I think the machines just took over. There’s not a lot of human interac- tion,’’ said Charlie Smith, chief investment officer at Fort Pitt Capital Group. ‘‘We’ve known that auto- mated trading can run away from you, and I think that’s what we saw happen today.’’ On the floor of the New York Stock Exchange, stone-faced traders hud- dled around electronic boards and televisions, silently watching and waiting. Traders’ screens were flashing numbers non-stop, with losses shown in solid blocks of red numbers. Jack Ablin, chief investment officer at Har- Remember with a Special Gift from Gayle’s at 649 Main Street Downtown Red Bluff Free Gift Wrapping Gift Certificates ris Private Bank in Chica- go, said the selling brought back memories of the 1987 crash. ‘‘I’ve been watching the markets since 1982 and, believe me, I froze at the screen in ’87,’’ Ablin said. ‘‘But today ... caused me to fall out of my chair at one point. It felt like we lost control.’’ The impact on some stocks was enormous although brief. Stock in the consulting firm Accen- ture fell to 4 cents after closing at $42.17 on Wednesday. It closed at $41.09, down just over $1. NYSE spokesman Ray- mond Pellecchia said the plunge wasn’t caused by a problem with the exchange’s trading sys- tems. The Nasdaq Stock Market said it was review- ing its trades with other trading networks. NYSE chief operating officer Larry Leibowitz said all the major stock exchanges were holding a conference call with the Securities and Exchange Commission to discuss what happened. It was not immediately known if there would be a statement issued after the call to explain the day’s events. Nasdaq issued a state- ment two hours after the market closed saying it was canceling trades that were executed between 2:40 p.m. and 3 p.m. that it called clearly erroneous. It did not, however, mention a cause of the plunge. Many professional investors and traders use computer program trading to buy and sell orders for large blocks of stocks. The programs use mathemati- cal models that are designed to give a trader 500 index, the index most closely watched by market pros, fell 37.75, or 3.2 per- cent, to 1,128.15. The Nasdaq composite index lost 82.65, or 3.4 percent, and closed at 2,319.64. At the market’s lows, all three indexes were showing losses for the year. The Dow now shows a gain of 0.9 percent for 2010, while the S&P is up 1.2 percent and the Nas- daq is up 2.2 percent. At the close, losses were so widespread that just 173 stocks rose on the NYSE, compared to 3,008 that fell. The major index- es were all down more than 3 percent. Meanwhile, interest rates on Treasurys soared as traders sought the safe- ty of U.S. government debt. The yield on the benchmark 10-year note, which moves opposite its price, fell to 3.4 percent from late Wednesday’s 3.54 percent. AG sues CalPERS officials for fraud SACRAMENTO (AP) — California Attorney General Jerry Brown has sued two former officials of the nation’s largest public pension fund for fraud, alleging they set up a sys- tem of kickbacks to guaran- tee outside firms won a piece of the fund’s lucrative investment portfolio. The lawsuit against the former officials at CalPERS, announced Thursday, is the product of an investigation into the role of so-called placement agents, the middlemen ★★ hired by money-manage- ment firms to help them win business with investors. The alleged kickback scheme raises questions about whether CalPERS board members and invest- ment officers had the best interests of the state’s pen- sioners at heart when they made investment decisions for the fund. ‘‘In this case, we’re talk- ing about around-the-world trips, we’re talking about limousine rides, we’re talk- ing about promises of jobs, and all of that really doesn’t AMERICAN SELF-STORAGE ★ 64 Mulberry Ave., Red Bluff • 527-1755 • Fully Fenced • Onsite Manager • Well Lit Property website: www.americanselfstorage.biz • RV & Vehicle parking now available LOWEST PRICE GUARANTEED! Call now for rates. pass the smell test, and it doesn’t pass the test of the laws of California,’’ Brown said in a news conference. ‘‘If you are engaged in selling investments, you owe a duty of full disclo- sure. That didn’t happen here,’’ Brown said. The lawsuit says former CalPERS Chief Executive Federico Buenrostro Jr. accepted tens of thousands of dollars in gifts, a Lake Tahoe condominium and promises of a future employment from Alfred Villalobos, a former CalPERS board member turned placement agent. The two also partied togeth- er in Dubai and traveled extensively together. It accuses both men of violat- ing securities law. Now Available Organic & Heirloom Spring Vegetable Plants 1 1/2 miles South of Red Bluff 12645 Hwy 99E (530) 529-2546 Does your business depend on revenue from Tehama County visitors? Tehama County Visitor Guide Proudly announcing the 2010-2011 A special magazine publication from The Daily News Handy 4.5” x 10” size Glossy Cover and Inside Pages 9,000 distribution Hotels – Restaurants Visitor Information Centers Chambers of Commerce In and out-of County! Interactive “Page-turn” online version posted on The Daily News’ Website through Spring, 2011 Advertising Reservations Deadline: Friday, May 7, 2010 To make sure your business is represented, contact your Daily News advertising representative today at (530) 527-2151 or email D NEWSAILY RED BLUFF TEHAMACOUNTY nsouza@redbluffdailynews.com for a full fact sheet in .jpg or .pdf file format