After stocks plunge, search begins for cause

The gut-wrenching stock market plunge Thursday reflected growing worries about a widening financial crisis in Europe spinning out of control. But the afternoon freefall was intensified by a modern electronic trading system that can move hundreds of millions of shares of stock at the speed of light.

Hours after the plunge, there was no clear explanation for why the Dow Jones industrial average lost some 6 percent of its value in a matter of minutes and then recovered almost as quickly. The Dow ended with a loss of 346.51 points or 3.2 percent after its biggest intraday move in history.

CNBC reported that the wild ride, which played out largely from 2:30 to 3 p.m. ET, might have been caused by human error when a trader hit B for "billion" in a trade instead of M for "million." CNBC said trading sources told it that the error may have happened at Citigroup, the nation's No. 3 bank company.

Citi said it had no evidence of a bad trade but was looking into the situation, a spokesman said.

The Dow already was under pressure, down about 260 points, when the sudden sell-off began. Mounting tensions over Europe’s unsuccessful efforts to calm investor fears about Greece’s debt crisis were worsened by the latest pictures of riots in the streets of Athens. Those tensions were heightened by a vote in the Greek parliament to impose tough economic sanctions.

Once the sell-off began, it was exacerbated by the same rocket fuel blamed for the 1987 crash: A series of program-driven trades that accelerated as the market continued its freefall.

Program trading kicked in and kept rolling on because of trigger points, said Peter Costa, president of Empire Executions, who has 30 years of experience as a New York Stock Exchange broker.

"Every trigger point they hit then hit another trigger point, and they kept selling, " Costa said.

Much of the trading occurred off the New York Stock Exchange, leading some to question whether a human or technical error on one of the electronic exchanges may have been behind the plunge.

The NYSE said there was no technical glitch.