Good news…we’re only off 500 on the Dow
The sell-off in stocks had been picking up a little steam as we headed into the afternoon but it didn’t look like anything worrisome. When we dropped from down 100 to down 225 it was news…but the drop from down 225 to down 300 then 500 was a train wreck. At roughly down 500 the office was filled with the staccato chatter of people working, watching a disaster, and trying to relay the news at the same time. The trading desk was then coming over the speakers announcing that liquidity was leaving the market. By the time the Dow was posting close to down 1,000 points it was the type of selloff that stops an entire office of seasoned capital markets folks in their tracks. Everyone was watching the machines to see how far this would go, to see what was fueling this. It happened so quickly that by the time you could call out the update on the new level it was stale and the market was down another huge chunk.
The fever pitch came at 1:42 Eastern time when the Dow Jones was trading at 10,458. It dropped 547 points over the next 5 minutes to post trades at 9,885. That was a very alarming 5 minutes.
What the heck was THAT?
Right now it’s clear that something started a panic and the herd all went for the door at the same time. I imagine that sometime later today or tomorrow we’ll have some news on what started it. Regardless of the cause it serves as a pretty good window into how “certain” everyone is of this recovery. At the first sign of trouble the market fell into panic selling that took us back to lows we haven’t seen since November 2009. That doesn’t tell me that the market is sold on this recovery.
I hope we get some news on this quickly because phones are ringing and rumors are starting about who did what and when.
The market has “recovered” nicely to be only down 410 points with the Dow trading at 10,462. I feel like I need to go outside for a cigarette…and I don’t smoke.
Below is a graph of the Dow’s activity this afternoon.
If you have any questions or if there is anything I can be doing for you just let me know.
Steve Scaramastro, SVP
800-311-0707
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