Dow Jones Industrial Average is in the midst of a scandal

Dow Jones Industrial Average - who will answer

In brief: The reasons for the historical decline Dow Jones Industrial Average will be investigated in the next few days, already have the first results and the names of those responsible for the collapse of the index.

Index Dow Jones Industrial remains in the headlines for two weeks in a row. Drop of the Dow Jones Industrial Average which was a record in the history of U.S. stock market will be the test supervisors. In the record collapse on Wall Street to blame for not only technical problems. Sixth of May 14.38 on the New York time index Dow Jones Industrial Average fell 360 points. And fell to 14.51 for another 900 points. For a few minutes a week of volatility in the U.S. stock markets turned into a nightmare, forcing Wall Street suffered dramatic fall day.

Later the same day, the index regained the position, but still closed 3.2% lower than the previous day, the biggest drop since February 2009 and has severely percent reduction since April 2009. May 7th Asian stock markets are faced with similar problems, and suffered massive losses. Part of the trouble Wall Street due to technical fault. It is rumored that a sharp decline in the value of such stable companies like Procter & Gamble and Accenture, a consulting firm, whose shares in the 14.47 cost $ 40, but just a minute were calculated in cents, due to a typographical error in the trading records, admitted on Wall Street somehow banker with thick fingers. It seems that after the price reduction was reflected in the stock indexes, automated trading programs have exacerbated the problem, immediately after selling shares to limit the losses investors. The fall comes after a 14.20, and according to the rules for termination of trading to 20% decline at the close of trading the previous day. The index has lost almost 10% of its value, and then find the bottom. If it turns out that the decline accelerated automated trading programs, this can give rise to requirements more stringent regulation of high-speed trading. They will become an echo of the sudden tightening of rules on derivatives that are described in the bill of financial regulation, which was proposed for consideration by the Senate last month after the Securities and Exchange Commission brought charges of fraud against Goldman Sachs. But it would be frivolous to blame human error and computer programs. When a thunderclap, the market went down. Dow closes below for several days in a row – the first time since January. Of course, the rate of decline has all been horrified, but the fact that no one was surprised. In the end, investors have plenty of reasons to be nervous.

Concerns about the effectiveness of the rescue of Greece and the threat of the spread of sovereign debt is still valid, despite the austerity program adopted by the Parliament of Greece, and reasonably strong demand for five-year Spanish bonds earlier. As in the troubled early months of the credit crisis, interbank lending once again showing signs of stress. Eurozone politicians appear determined to only respond to the crisis rather than prevent it: Jean-Claude Trichet, ECB president, told reporters that the ECB has not discussed the possibility of purchasing government bonds (this is somewhat reassuring to markets) in the session manager Council in Lisbon. Problems of sovereign debt in Europe partly simplify the lives of America: the yield on bonds of the Ministry of Finance has declined sharply, as investors took shelter in U.S. government bonds. But the long decline of the euro and the weakness caused by strict economy deprived of any foundation hopes to restore the United States with exports. Weak production figures in China, received a little earlier, reinforced these concerns. Uncertainty about the outcome of elections in the UK pound has weakened against the euro. Is there something horrible, causing a reduction in the value of shares Procter & Gamble almost 37%? No. But in light of the above can not explain the sudden collapse of markets only technical problems. Everything is much more difficult.

Ukrainian Globalist
2010-05-16 11:39, Economics.

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