Typo, Glitches, Panic Blamed for Stock Market Mayhem

'Fat finger trade' likely triggered trader panic
By Rob Quinn,  Newser Staff
Posted May 7, 2010 1:22 AM CDT
Updated May 7, 2010 6:00 AM CDT
Typo, Glitches, Panic Blamed for Stock Market Mayhem
Trader Steven Rickard reacts in the S&P 500 futures pit at the CME Group in Chicago near the close of trading yesterday.   (AP Photo/Kiichiro Sato)

(Newser) – What's known in the business as a "fat finger" trade may have been responsible for yesterday's stock market chaos, analysts say. Multiple sources believe a trader at a major firm—possibly Citigroup—hit a "B" instead of an "M" while trading Procter & Gamble shares, selling a billion shares instead of a million, and sending the Dow Jones on a panicky rollercoaster ride. Major exchanges are also examining possible erroneous trades in multiple stocks that triggered glitches in the trading system, notes the Wall Street Journal.

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Traders were already nervous and the Greek crisis had been sending prices downward even before the panic, the New York Times notes. The plunge "happened so quickly, it was like a torpedo," said a chief strategic officer at a top hedge fund. "It was mayhem." The lesson from yesterday's chaos should be that "any market can fail temporarily," writes Felix Salmon at Reuters, predicting that the panic that hit markets yesterday will result in "increased volatility and risk aversion." (Read more Wall Street stories.)

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