U.S. Markets Suffer Unexplained Plunge, Regain Ground by Closing

BY Jason M. Breslow  May 6, 2010 at 4:25 PM EDT

U.S. markets plunged Thursday afternoon amid fears over the Greek debt crisis and a possible trading glitch involving shares of Procter & Gamble.

The volatile afternoon left market watchers struggling to make sense of the wild day on Wall Street.

The Dow Jones industrial average fell by as much 998.5 points, or 9.2 percent, in afternoon trading for its steepest intraday loss since 1987.The Standard & Poor’s 500 index lost as much as 8.6 percent, while the Nasdaq Composite Index dropped 96.53 points, or 4 percent.

The dramatic fall was quickly followed by a rebound. By the end of trading, the Dow climbed back to 10,519, down 348.63 points or 3.21 percent from Thursday’s close. The Nasdaq was off 82.65 points, or 3.44 percent, at 2,319, and the S&P dipped 37.85 points, or 3.25 percent, to 1,128.

In Europe, the euro fell to its lowest level against the dollar in 14 months, to $1.2746.

In a statement read on CNN, a Procter & Gamble official said the company was “looking into” whether there were any errors in trades of the company’s stock that led to a sudden drop in its value. The stock regained much of what it lost, ending the day at $60.75, down 2.27 percent.

A spokesman for the New York Stock Exchange told Bloomberg News that the afternoon trading contained “a number of erroneous trades.” Nasdaq officials are now investigating what happened.

Markets began their dramatic fall as protesters took to the streets of Greece for a second consecutive day to protest austerity measures approved by lawmakers in Athens. With $11.6 billion in debt payments due by May 19, Greece approved the measures in order to gain access to $142 billion in emergency aid from the European Union and the International Monetary Fund.

On Friday, lawmakers in Germany are expected to hold a key vote on whether to OK a $28.4 billion contribution to the rescue package.