In a frantic thirty minutes of trading, the Dow Jones plunged by more than nine per cent – its worse fall since 1987 – before starting to recover.
At close in New York the Dow Jones was down about 3.20 per cent, the S&P down 3.24 per cent, and Nasdaq 3.44 per cent.
The drama came hours after the Greek Parliament approved the country’s drastic austerity bill and initially the market panic was attributed to a fears of a knock-on impact from Greece and other European countries on the global financial system.
But with bizarre trading in individual stocks – Procter & Gamble, the consumer products giant typically a safe investment in times of market turmoil, plunged 37 per cent in a matter of minutes.
While management consultancy Accenture traded briefly at just one cent.
Nasdaq said that it was working with other major markets to review trading activity between 2pm and 3pm.
Meanwhile, there were rumours in the financial world that the drop may have been caused by an erroneous “fat finger” trade being made at a big Wall Street bank, leading Citigroup to issue a statement saying it had “no evidence” that it “was involved in any erroneous transaction.”
US President Barack Obama was forced to issue a statement that the White House was monitoring the Greek situation.
There are market worries that Greece may default on its debt and that trouble there could spread to other parts of Europe, including Spain or Portugal.