While the day ended with deep index and stock losses, they recovered from a catastrophic near minus 10 percent in the late afternoon. After the close, the NASDAQ announced it would not honor trades if they resulted in gains of plus 60 percent realized after 2:40 in the afternoon.
Yet that is only one version attempting to explain the savage yo-yo of prices. Others put the blame on the ongoing financial crisis of Greece and the resulting decline of the Euro. Lets look at history, using it to present some hard facts that focus on established conditions surrounding similar losses.
One, todays percentage losses for the DJIA and the S&P500 rank as their 65th worse decline since 1950. The NASDAQ position, however, stands as its 122nd – but that relative moderation results from the deep losses suffered when the electronic boom burst.
Two, its necessary to go back almost a year to find drops as serious.
Three, the NASDAQ record confirms that only 92 trading days since 2000, had deeper drops. The S&P500 shows 43 worse days while the DJIA comes in with 39.
Four, all these losses occurred during an underlying trend of steeply falling prices during the 2007/2009 downturn as well as the 2000/2003 slump.
Five, these facts challenge explanations based on bookkeeping or other purely mechanical causes although it is prudent to conjecture that indeed these circumstances contributed to, and worsened, a major decline resulting from changed perceptions of the fundamentals.
DJIA - 3.20 percent NASDAQ - 3.44 percent S&P500 -3.24 percent