Proctor And Gamble Stock Trading Error?

Procter & Gamble Co. said a sudden drop in its stock price Thursday afternoon was a trading error.
The Dow Jones Industrial Average closed down nearly 350 points but not before going on a wild ride that included a 1,000 point drop in the middle of the day.

The dip in the Procter and Gamble stock from $60 to that of below $40 around 2:45 pm ET, along with Dow Jones also slumping 600 points almost around the same time in less than fifteen minutes have raised a great concern on the trading.

Was it really a stock trading error? Or is Proctor And Gamble hiding something?

asked by Abby in Investing | 3473 views | 05-06-2010 at 10:23 PM

A stock trading error in Proctor and Gamble may have been responsible for the last portion of the selling. Wall Street roared off of its lows, regaining roughly 70% of the losses. The unusual trading activity is being investigated by the NASDAQ and the New York Stock Exchange.

Speculation is that a trade involving Proctor and Gamble stock was entered at $16 "billion" when it should have been $16 "million."

Sure, there are worries about the debt situation in Europe, but the flashback to 2008 could have been due to a trader's error. The Wall Street Journal reports, "Several market watchers said they heard a major firm may have accidentally released an errant program, where a trader accidentally placed an order to sell $16 billion, instead of $16 million, worth of e-minis, the futures contracts tied to equity indexes."

And CNBC says, "According to multiple sources, a trader entered a 'b' for billion instead of an 'm' for million in a trade possibly involving Procter & Gamble, a component in the Dow."

Within five minutes, the Dow dropped 997 points shortly after 2 p.m. to below 10,000 for the first time since February, and then by 3 p.m. had recovered more than 600 points of that decline. The S & P 500 index and Nasdaq followed suit, with the Nasdaq at one point down more than nine percent.

A report by CNN.com says P&G's 37-percent nosedive in just 37 minutes accounted for 172 points shed by the Dow out of the eventual nearly one-thousand points lost on the index.

It was the biggest single day decline in intraday trading in the history of the Dow.

There also is a growing sense that any collapse of Greece could trigger a wave of defaults across Europe and even the world.

The New York Stock Exchange said each stock has its own circuit breaker level. When these stocks fall below their levels, then they can be traded on any other exchange or platform at any price. When P&G fell below its circuit breaker, a bid came in for the stock at $39.37 from the Nasdaq, the NYSE said.

"We aren't in a position to comment on the details of an individual trade today but we believe the trade was an error," Proctor And Gamble said in an e-mailed statement.

answered by Nine | 05-06-2010 at 10:29 PM

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