Stocks Fall On "Snowball" Effect

Thursday, 11 Oct 2007 | 2:58 PM ET

Here’s a good example of what can happen on a low volume, low volatility day. Small, disconnected events can snowball, short-term technical levels can breached, and suddenly the S&P is down 20 points in 30 minutes.

What happened?

1) Started with BIDU dropping after JPM cut estimates

2) NASDAQ 100 began dropping right after that

3) Then Axel Weber, the head of the Deutsche Bundesbank and ECB Governing Council member, said the ECB may need to raise interest rates to counter the rise in prices. Mr. Weber said that inflation stability has priority over economic support.

When you get sudden mini-corrections, the groups that have moved the most are the ones where you see quick, sharp profit-taking: tech and energy.

Questions? Comments? tradertalk@cnbc.com

  Price   Change %Change


  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

Wall Street

  • New York Attorney General Eric Schneiderman

    The New York attorney general's office has subpoenaed about a half-dozen high-frequency trading firms, a source told CNBC.

  • China's Weibo has priced its initial public offering at $17 per American Depository Share, at the bottom of its planned range.

  • Some high profile earnings beats by General Electric, Pepsico and Morgan Stanley helped counterbalance the hangover of Wednesday's big tech earnings misses.