Dow’s dizzying drop was scary, surreal: traders

By Michael Erman and Deepa Seetharaman

NEW YORK (BestGrowthStock) – Shell-shocked traders streamed out of the New York Stock Exchange on Thursday, wondering what had hit them after a stunning plunge of almost 1,000 points in the Dow Jones Industrial Average.

At 2:39 p.m. in New York, the bottom fell out of the market and the Dow, already down about 3 percent, tumbled an additional 650 points to 9,872 in a matter of eight minutes, its biggest intraday points loss ever.

The market eventually recovered some of those losses, closing down about 348 points, but many expressed concerns about what Friday’s trading might bring.

“It was the craziest day I’ve ever had,” said Mark Galorenzo, an options trader at TMT East, as he left the Big Board’s headquarters shortly after the market closed.

“It was worse than 2008 — the market sold off faster and deeper,” he said. “I was just monitoring my positions and making sure I didn’t get blown out.”

Galorenzo and other traders described the day as scary, surreal and frantic after a year of steady gains. Worldwide, traders were roused from their beds to contend with a market that was apparently in free-fall.

“My (main trader) is in Cambodia at the moment, I’m going to call him and tell him to get trading,” one hedge fund executive said.

Mom and pop investors were also rattled by the move. Mike Dipietro, outside the TD Ameritrade brokerage branch in midtown Manhattan, said he suffered “a hit of a few thousand dollars.”

The drop may have been initially triggered by a trading error, sources told Reuters. Many traders were quick to blame the drop on high-frequency trading, lightning-fast computerized trading that now accounts for 60 percent of total U.S. equity volume.

Some leaving the exchange were overheard jokingly comparing high-frequency trading to Skynet, the artificial intelligence system that is the antagonist in the ‘Terminator’ movies.

“If there were specialists still on this stock exchange, this never would have happened,” said Charlie Caccese, trader at J Streicher & Co.

But many traders readily acknowledged that the stock market and the broader economy remained fragile.

“It’s not all technical,” said Theodore Weisberg, a 41-year veteran of the New York Stock Exchange. “There are clearly fundamental issues, and the market was ripe for a sell-off.”

Some of those fundamental issues include sovereign debt, highlighted by Greece’s recent woes, high unemployment in the United States and languishing home prices.

“Unless you were not reading (about) the market, you were expecting a big drop,” said one man who identified himself as a banker, standing outside the Trump building near the stock exchange. “This is the next big crisis: the sovereign debt crisis.”

Not everyone was shaken by the startling plunge. Outside Ulysses, a popular Wall Street watering hole, a group of investors and hedge fund traders joked that one of them had “made his year” as the market crumbled.

But most seemed anxious to avoid the media clustering the exits and catch their trains and subways home.

One trader, Steve Sciani, described the day as his worst in 15 years. When the market ultimately closed down 350 points, normally considered a bad day, he said it seemed like a big relief.

Stock Research

(Additional reporting by Ernest Scheyder in New York and Martin De Sa’Pinto in Zurich; Editing by Gary Hill)

Dow’s dizzying drop was scary, surreal: traders