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The May 6 Meltdown. What Happened?

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On Thursday, the market briefly lost its mind. Some combination of an erroneous trade and massive amounts of computer algorithms sent stocks plunging -- the Dow fell nearly 1,000 points at one point … before rocketing right on back. For the day, the major indices were off about 3%.

The NYSE and Nasdaq have canceled trades of 296 companies from Thursday, including Accenture and Boston Beer, which both fell all the way to $0.01 at one point.

Here at the Fool, we're using May 6 as a reminder to focus on the long term -- because sometimes the daily machinations of the stock market aren't tied to the underlying value of the businesses.

If you missed what happened, here's a roundup with news, commentary, and analysis:

In review

Collateral damage

Community take

News from the Associated Press

Accenture is an Inside Value recommendation. The Fool has a disclosure policy.

Read/Post Comments (7) | Recommend This Article (14)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 08, 2010, at 11:12 AM, tradeiti wrote:

    Read a headline that stated "Regulators check millions of trades,cancel thousands",are you kidding?

    Do the math,if you take away the S from millions and thousands what do you get?A thousand is 1/10th of 1% of a million.What about everyone else? Read a comment from a person who tried to buy Accenture

    at .10 but was locked out of his brokerage account.

    Guess what,somebody got to buy at .10,otherwise it would still be there.Anyone who believes this was a glich,a mistake,truly is a FOOL!

  • Report this Comment On May 10, 2010, at 4:18 AM, Tirelli wrote:

    What a hoax, been stoped out on stop loss - just to rebound far above my stop loss call...and nothing i can do about

  • Report this Comment On May 10, 2010, at 7:16 AM, RagnarRedbeard wrote:

    It was no glitch. It was a test. Someone made a lot money doing it and the SEC won't lift a finger.

  • Report this Comment On May 10, 2010, at 11:12 AM, nycbtiguyfool wrote:

    Smells a bit fish, as if someone found a loophole and was able to manipulate the system. Reminds me of the Enron traders who were able to turn the power off in California to artifically drive up the prices of electricity.

    In a word of so many crooks it's hard for the average Joe to have faith and security in anything these days. Soon we'll live in a society of "if you can beat em, join em's".

  • Report this Comment On May 14, 2010, at 12:21 PM, Whitermco wrote:

    The only trigger I had active was HAS Hasbro at 36.25 and was taken at 36.05. TDAmeritrade told me that all trades at 60% of pre trading-post trading were cancelled. HAS went back up to 39 immediately and now is/was over 42.

    Someone has made a very quick 3000 at my expense. They say nothing can be done. WOW

    I think this was an illegal something.

  • Report this Comment On May 14, 2010, at 2:59 PM, Whitermco wrote:

    Does anyone know where I can get a list of the 296 companies whose trades were canceled?

  • Report this Comment On May 15, 2010, at 3:27 AM, galivantstomt wrote:

    While the meltdown smelled rotten, I am seriously how the market, with a single day's bounce back has managed to find itsrl in a state of decline since. Profit taking or plain withdrawal from what has become a volitile maret. If it doesn't settle out in the naxt few days, I'm to have to react to what I perceive to be a long term decline and convert to cash and jumping back as prices decline further.

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