For a brief moment today the Dow Jones Industrial Average was down almost 1,000 points according to CNBC television coverage. Stocks have rebounded nicely since their lows but we are still down 500 points, or 5%, since the start of trading today. Over three days the market has suffered the worst loss in value since March, 2009.
Reports now are that the trading machines at the New York Stock Exchange may have broken down. Jim Cramer is speculating such since (he says) markets do not crash several hundred points in five minutes. We shall see. What we do know is that the market slid 700 points in about 20 minutes before regaining most of that crash.
Fox News channel is reporting that a “bad trade” for Procter & Gamble stock, in which the share price was mistakenly lowered considerably, triggered an avalanche of program selling. Procter and Gamble is a component of the DJIA. Minutes after the market crashed an additional 500 points, program buying kicked in to cover short positions in the market.
Whatever happens the rest of the day, traders are obviously very nervous. The Greek riot situation and austerity program is causing uncertainty in European banking circles, and that uncertainly is spilling into the United States markets because financial systems are so interlinked world-wide.
But long-term, President Obama’s policies on the domestic front are doing no favors to our economy. Employers are getting hammered with expectations of higher taxes, new government entitlements are smothering innovation, and reckless government fiscal policy is worrying everyone.
While it is too early to call the events of this week an Obama stock market crash, one wonders if we are on the brink.