By Matt Krantz, USA TODAY  Thursday as the Dow Jones industrial average crashed nearly 1,000 points before bouncing back to close down 347.80 points, or 3.2%, to 10,520.32.  Mounting worries about Greece's financial condition and weak results from U.S. retailers kicked of the market's harrowing declines. But the Dow's crash literally took on a life of its own, crumbling in a brutal free fall that pushed stocks down more than 9%, their worst fall since the crash of October 1987.  "It was almost like if you turned around to have a cup of coffee, and came back, you'd say 'What happened?'" says Jeremy Siegel, professor of finance at the University of Pennsylvania. "Usually panic takes a little longer and more people know about it."  Traders and investors were left puzzling over what caused such a major market swing in such a short period of time.  The European concern set the negative tone for the markets and put investors in a selling mood, says Edward Wedbush, president of investments firm Wedbush Securities.  But things got worse especially after two of the 30 stocks in the Dow, Procter & Gamble (PG) and 3M (MMM), crashed more than 30% in just 15 minutes after 2:30 p.m.  Those crashes are likely the result of some sort of error, Wedbush says, either human or computer. Technical problems caused either by computers or traders quickly fed on its itself and caused program trading to launch sell orders, says Joseph Saluzzi, trader at Themis Trading.  "That was a market structure problem," he says, adding that orders from investors to buy the stocks flooded in during the crash as speculators guessed the market was selling off too much.  There were no technology problems at the New York Stock Exchange, says Eric Ryan, spokesman. However, the Nasdaq, which also conducts trading in P&G and 3M, is reviewing the market activity between 2 p.m. and 3 p.m., according to an e-mail from a Nasdaq spokesman.  The Securities and Exchange Commission and the Commodity Futures Trading Commission said they are investigating the market's volatility.  Nasdaq issued a statement two hours after the market closed saying it was canceling trades that were executed between 2:40 p.m. and 3 p.m. that it called clearly erroneous. It did not, however, mention a cause of the plunge.  The day's market crash, though, wasn't entirely due to trading problems, but also due to some large investors shifting money from stocks to U.S. government securities. The yield on the 10-year Treasury plunged to 3.39% from 3.54%, according to Bloomberg News.  "It was a combination of things," Wedbush says.  Investors who kept their heads during the day knew that the market's sell-off was extreme and exaggerated by potential trading problems, says Hugh Johnson of Johnson Illington Advisors. "There are reasons to be worried, but not that worried," he says.  And investors shouldn't be surprised to see the market running into trouble, especially after how much stocks have risen since March 2009, says Rod Smyth of Riverfront Investment Group. "Clearly there was a lot of money waiting for the correction," he says. "When the market broke through critical levels, that triggered a massive amount of selling."  The bull market is intact, but under stress, as investors try to guess how the European central bank will deal with problems in Europe, Smyth says. If the bank acts quickly, it can be contained.  A correction in U.S. stocks isn't surprising. "But what we all have to get our heads around is why did it happen so quickly?"  Even if there were technical issues, emotions about the world economy were running high. The Dow has lost 631 points, or more than 5%, in three days amid worries about Greece. That is its largest three-day percentage drop since March 2009, when the stock market was nearing its bottom following the financial crisis.  The Standard & Poor's 500 index, the index most closely watched by market pros, fell 37.75, or 3.2%, to 1,128.15. The Nasdaq composite index lost 82.65, or 3.4%, to close at 2,319.64.  At the market's lows, all three indexes were showing losses for the year. The Dow now shows a gain of 0.9% for 2010, while the S&P is up 1.2% and the Nasdaq is up 2.2%.  At the close, losses were so widespread that just 173 stocks rose on the NYSE, compared to 3,008 that fell. The major indexes were all down more than 3%.  You share in the USA TODAY community, so please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. Use the "Report Abuse" button to make a difference.
Stocks plunged Thursday and the Dow Jones industrials skidded almost 1,000 points before recovering to a 347-point loss as traders succumbed to fears that Greece's debt problems would halt the global economic recovery.