Stock Market News for May 7, 2010 - Market News

It was a bad day on the Wall Street Thursday.  An apparent trading error exacerbated selloff in U.S. stocks, sending the Dow Jones industrial average to its biggest one day drop ever and leaving traders stone-faced.  Although the blue-chip average managed to reclaim about two-thirds of the losses, the precipitous selling had done the damage by the time the closing bell rang.

With markets still on a shaky ground because of the European debt crisis, a trader, apparently, mistyped an order to sell a large chunk of stocks, and investors were quick to press the panic button.  Selling intensified and the Dow average dropped almost 1,000 points.  At the closing bell, the average was down almost 348 points, or 3.2%, for its worst percentage decline since April 2009.  The erroneous trade sent shares in Dow component Procter & Gamble (NYSE:PG) down as much as $23, or almost 37%.  However, shares in the consumer goods maker recovered to close down only $1.41.

The tech-laden NASDAQ dropped 82.65 points, or 3.4%, to close at 2,319.64 and the closely watched Standard & Poor's 500 index fell 38 points, or 3.2%, to 1,128.15.  The safety appeal of the U.S. government debt sent interest rates soaring.  The yield on the benchmark 10-year dropped to 3.4% from 3.54%.  The Vix, widely regarded as market’s fear gauge spiked more than 63% before settling up 32% at 32.80.

Stock futures suggest trading would be stable when the markets open this morning after one of the most volatile days in Wall Street’s history.  Before the open, Dow Jones industrial average futures are up 59 points, or 0.6%, to 10,516 points.  Standard & Poor's 500 index futures rose 6.40 points, or 0.6%, to 1,128.80, while Nasdaq 100 index futures are up 7.50 points, or 0.4%, to 1,893.50.

Amid all the uproar, fears also persisted that the Greek crisis was turning out to be bigger than expected.  Sounding a note of caution, Federal Reserve Bank of St. Louis President James Bullard noted the European crisis did not augur well for the US economy.

Even as the G7 plans a conference call on the Greek situation, a hung mandate in the UK raised doubts about that country's inability to pass budget-cutting reforms.  Crude prices, which plunged 3.6% in yesterday's trading on fears of a demand downturn on global economic weakness, are trading down over 1%.

Meanwhile, Joseph Immelt, CEO of General Electric (NYSE:GE) joined Berkshire Hathaway’s (NYSE:BRK.A) Warren Buffett in criticizing the "populist rhetoric" against Goldman Sachs (NYSE:GS) and the banking sector.  Immelt also noted that "This is a point in time when the world needs the U.S. to be a beacon of stability, a beacon of reliability."

At 11:00 ET President Obama will discuss the employment results. It might also be hoped that some realization of the costs of his blame-throwing political machinations may have just hit home.

Zacks Investment Research