On Tuesday, the House Financial Services Committee will hold a hearing to find out what exactly happened on Thursday, May 6, to send the Dow Jones Industrial Average diving 1,000 points in a matter of minutes.
This is perhaps the first time that a congressional hearing will actually be useful in financial fact-finding. The truth of what happened is buried among records of billions of Thursday trades. The New York Stock Exchange and Nasdaq, unable to publicly explain the cause, chose a "kill them all and let God sort them out" approach, cancelling thousands of trades.
The days since the plunge have been plagued with conflicting news reports, widespread suspicion about the power of computers, allegations of cyberterrorism and other species of rampant theorizing"”all great material for conspiracy theorists and fans of The Matrix, but not as great for people trying to piece together why, exactly, the markets spiraled out of control.
Here is The Big Money's guide to the top five mysteries surrounding the market rout.
1. What caused it?
It is surprising that this should be the biggest mystery, considering that the New York Stock Exchange, Nasdaq, and the "dark pools" all run mostly on computers, which should make it easy to scan for an errant trade or evidence of a glitch. Almost everyone agrees that, at some point, computers programmed to trade at certain prices took over and magnified the problem. But what caused the problem? As a Wall Street Journal headline so eloquently put it, "regulators can't name cause of market slide."
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