NEW YORK U.S. stocks plunged, bond prices soared and the euro slumped on Thursday afternoon as the Europe's sovereign debt crisis exacerbated worries about the health of banks still recovering from the 2008 global banking crisis.
The Dow Jones Industrial Average plunged more than 9 pct Thursday afternoon before recovering some ground, the benchmark U.S. 30 year bond soared more than 4 points, and the euro was down 2 percent for the day, while the U.S. dollar fell more than 6 pct against the yen.
Latin American stocks also fell sharply with the MSCI Latin American stock index down more than 6.0 percent at one point.
RYAN LARSON, HEAD OF EQUITY TRADING AT VOYAGEUR ASSET MANAGEMENT IN CHICAGO:
"I don't know if the drop we just saw was electronic, but we've had weakness all this past week. The market has one eye on the domestic market and one on the debt levels in Europe and whether they could spread. It's a perfect storm for a reason to sell."
CARL BIRKELBACH, CHAIRMAN AND CEO OF BIRKELBACH INVESTMENT SECURITIES IN CHICAGO
"The first story is that the NYSE system somehow broke down, and that's scary. There are going to be a lot of questions about program trading, because that's touched off the decline. If computers are running the world instead of people, people are going to lose confidence in the financial institutions."
STEPHEN SCHORK, EDITOR, THE SCHORK REPORT, VILLANOVA, PENNSYLVANIA
"All bets are off at this point on oil. At one point, we (crude oil) were actually below $75 a barrel. Fear begets fear and commodities was piggybacking on equities. I don't think the market will test below $70 yet but we'll certainly see a retest of $75.
The stockmarket began to tank as soon as the riots broke out in Greece. Everything went boom, boom, boom. Everyone was watching the screens and was being told that it's a peaceful demonstration going on in Greece. All of a sudden, as soon as the sun went down, all hell broke loose and that's when the selling just started to kick in.
TOM BENTZ, BROKER, BNP PARIBAS COMMODITY FUTURES, INC, NEW YORK.
"Oil was just following the stock market. The stock market accelerated down, fell almost a 1,000 points on the Dow, and oil accelerated as well. Everything is in kind of a panic sell mode here. All the markets are moving very, very quickly."
CHRIS JARVIS, SENIOR ANALYST, CAPROCK RISK MANAGEMENT, HAMPTON FALLS, NEW HAMPSHIRE:
"A combination of contagion out of Greece coupled with algorithmic trading systems accelerated a move lower in a very short time frame for the major equity markets. We believe market participants will view this as a buying opportunity generated by program trading that exacerbated a move to the downside."
WAYNE KAUFMAN, CHIEF MARKET ANALYST AT JOHN THOMAS FINANCIAL IN NEW YORK:
"No idea what happened with the plunge. Obviously everyone is concerned about Greece, and there's that crucial vote in Germany tomorrow. Germany is about 30 percent of the EU package and the deal is very unpopular over there. If Greece doesn't get the money, they could default, and that could spiral and create a situation where banks have to revalue their assets.
"Since no one knows everyone's exposure is to the sovereign issue, banks will be afraid to do business with each other, and that's the sort of thing that led to the Lehman collapse. So I have to believe that worries about the German vote not passing is what led to this.
DAVID ADER, HEAD OF GOVERNMENT BOND STRATEGY AT CRT CAPITAL GROUP IN STAMFORD, CONNECTICUT
"Electronic systems are down. It's complete panic because you're getting these violent moves, extremely poor liquidity not very good prints on the screens because of all the electronic issues that are going forth, presumably because things are changing so much.
"As we see now the Dow break at one point under 10,000 you trigger a lot of the types of buying programs and other shifts in allocations that they wreak of panic.
It's no longer a fundamental story. We can't talk about value...we're talking about position. And here what you're seeing and I think we've seen it in Europe is simply the pain trade, 'I'm long stocks, get me out at any cost.'"
"There has been no news this afternoon, the type of thing that would normally you would say this justifies the price action...It's positions being forced out, prices driving those position shifts, forcing people's hands. And, a problem with systems in general. I think that comes into play. Put it all together, that's what's going on."
KEITH SPRINGER, PRESIDENT, CAPITAL FINANCIAL ADVISORY SERVICES, SACRAMENTO, CALIFORNIA:
"All you saw was the absence of bids and you had the trading programs kick in ... it's almost like institutions had them set on 10,500. It's just fear based selling. It started out as a catalyst for a market that was deeply overbought. It's a silly, fear-based decline ... people are looking at Greeks throwing bricks and molotov cocktails.
"The market reacts based on the fear it doesn't know, and right now it doesn't know about Spain and Portugal. The reality is that if Spain and Portugal go, then so does the UK.
"Right now you just have a panic sell. It could be a long-term negative for stock market because it could mean the long term high is in place. It's very likely we've seen the highs for this cycle."
PAUL MENDELSOHN, CHIEF INVESTMENT STRATEGIST AT WINDHAM FINANCIAL SERVICES IN CHARLOTTE, VERMONT.
"Oh my God. Well you had this panic set in and everybody just wanted out at any price. I think we got a little bit overdone too fast. You're seeing it across all markets, you're seeing a panic in the euro market, you're seeing a panic in the U.S. bond market with everybody coming into U.S. denominated assets, you're seeing a panic in the gold market with Europeans buying gold. And they are dumping paper assets and they are buying physical assets and you just have this tremendous flight to safety taking place. And I don't blame anybody here.
"You have a couple of things. You have this German parliamentary vote on whether to do the bailout or not. And look what happened in the U.S. when Congress initially turned down the TARP plan, you had activity just like this. So nobody knows what is going to happen overnight and so people were running for cover in here and it just got a little ahead of itself.
WILLIAM LARKIN, FIXED INCOME PORTFOLIO MANAGER, CABOT MONEY MANAGEMENT, SALEM, MASSACHUSETTS:
"This is an old fashioned rout. I could see the car coming off the rails -- it initially spread to the corporate bond market. I don't think I have seen anything like that in my career, an abrupt selloff of that scale and that fast. What happens is everybody goes to sell, everybody decided to take down the risk.
I noticed that all of a sudden the credit markets started to come apart a little bit and then that spread and contaminated the equity market. It switched to more of a credit crisis situation, which is very problematic. The worst possible event here is that it contaminates the capital markets, because if it contaminates the capital markets that means it is going to be long-lasting. We are going from event risk to now having a fundamental economic impact."
SUVRAT PRAKASH, US INTEREST RATE STRATEGIST WITH BNP PARIBAS IN NEW YORK:
"Somebody knows something but we sure don't. It's just a meltdown everywhere...no information. On our side we're seeing a bit of buying but it's basically just everyone adjusting their yields lower as stocks are falling."
DOUG SMITH, CHIEF ECONOMIST FOR THE AMERICAS, STANDARD CHARTERED BANK, NEW YORK:
"We're just in a big risk sell-off at the moment. Anything with risk is a four letter word. There's nothing specific to Brazil or Mexico."
"A lot of people who had been in carry positions are getting stopped out. At the moment everything with risk associated with it is getting crushed."