Sabotage Not Ruled Out In Wall Street Plunge: Bettors React
President Obama has not ruled out sabotage in Thursday's shocking near 1,000 point loss on the Stock Exchange after rebounding later in the day.
The president announced Friday morning that a full review is being conducted, and Gibbs said Obama is waiting to hear the results of a review before ruling out what might have caused it, including the possibility of sabotage, The Hill reported on Friday afternoon.
"I wouldn't rule anything in or rule anything out," Gibbs told reporters in his West Wing office Friday. "I think that's, appropriately, why they're reviewing what may or may not have happened."
Initial theories as to what caused the plunge included a technology glitch and a mistaken transaction by a large trader. The drop also occurred during news that riots were escalating in Greece related to their current debt crisis and the potential of protests spreading elsewhere.
Christopher Ruth, chief investment officer for Comerica Asset Management, said that he was sceptical of how the market was trading, according to the Detroit Free Press. Some activity just didn't make sense -- making his group question whether some sort of technical, mechanical computer error took place.
"It doesn't look and feel like your typical market sell-off," Ruth said. "My advice would be 'Don't be panicked into selling something.' "
Congress also wants a full review of Thursday's scare.
Sens. Ted Kaufman, D-Del., and Mark Warner, D-Va., are working with Senate Banking Committee members to use a pending financial regulation bill to address the situation.
Warner and Kaufman want to use the financial overhaul bill moving through the Senate to insist that the Securities and Exchange Commission and the Commodity Futures Trading Commission undertake a thorough study of high-frequency trading and other tools that move markets in the blink of an eye.
"We saw a living, breathing, real-time example today of the potential catastrophe that takes place if we don't have an ability to make sure we adequately use this technology," Warner said late Thursday. "We must have safeguards and really realize how some of these firms are using this technology to get an advantage over the everyday main street investor."
"Right now, there is no way to know what is happening in this marketplace," Kaufman said.
Stocks managed to lose more ground on Friday. The Dow Jones Industrial Average lost 1.3% for the day (139 points) to finish at 10,380, and the S&P 500 fell 1.5% to end at 1,110. The big loser was the Nasdaq, which tumbled 2.3% to close out at 2,265.
The financial betting markets were starting to light up a bit by Friday.
The single most traded financial exchange at intrade.com Friday afternoon was the Dow Jones to close ON or (slightly) ABOVE 9500 on 31 Dec 2010.
Aaron Goldstein, Gambling911.com
