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Stock Markets Take Major Tumble; Landslide Hits San Francisco
Aired February 27, 2007 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: Hello, everyone. I'm Kyra Phillips, live at the CNN world headquarters in Atlanta.
DON LEMON, CNN ANCHOR: And I'm Don Lemon.
On the 10-most-wanted list since 1999, a $25 million bounty on his dead -- so, why is Osama bin Laden still on the loose? We will talk with a man who has been in on that search.
PHILLIPS: Who pulled the plug on the stock market? A major sell-off has Wall Street's full attention. We will update the numbers.
LEMON: And the numbers on the scale are staggering for this 8- year-old. Do you think British officials should take charge of his obesity problem? Well, we're reading your e-mails right here in the CNN.
And we start this hour with breaking news: the stock market taking a major tumble.
Susan Lisovicz, fill us in.
SUSAN LISOVICZ, CNN CORRESPONDENT: Don, we were looking at the worst sell-off since March 24, 2003, when the Dow dropped 300 points.
Right now, we're off the charts. I can't tell you when the Dow dropped this kind of level. I'm guessing that it occurred in the aftermath of September 11, with the markets reopened.
I mean, we're still talking about a big difference between them, but, in the last couple of minutes, we went from a 200-point, 240- point loss, to 475. Actually, I heard the shouts on the trading floor. That is really what made me look at the board.
There are a couple of reasons why the market is selling off so dramatically. You could have looked at what happened in China. Their version of the Dow Jones industrials, the Shanghai composite, dropped nearly 9 percent in one session. And the ripple effect just kept spreading west.
All of the European stock market averages dropped at least 2 percent or more. But, right now, we're looking, if the Dow -- if the -- if the market stopped trading right now, we're looking at a 4 percent loss for the Dow Jones industrials.
When the markets reopened after the September 11 attack, we were looking at a 7 percent decline, just to put in that perspective for you -- Don.
LEMON: Oh, my goodness. So, is this -- we want to know -- I don't know if you know this -- any indication of a slowing economy? How troubled by this should investors be?
LISOVICZ: Well, I mean, the fact is, people have been saying for months, Don, that this kind of correction was overdue. And it's painful when it happens like this.
But just to give you a perspective, the folks at Standard & Poor's, which monitor this, kind of said that the last time S&P 500 index -- OK, that is the -- the broadest of the three major averages. There's the Dow, which is 30 stocks, Nasdaq, which is heavily weighted with tech stocks. And then you have the broader S&P 500 stocks.
They said, we have gone 942 days without a 2 percent decline or more in the S&P 500. And that was the longest since 1950. So, a correction was long overdue. This one, the S&P 500 right now is down 4 percent.
So, it's -- it's -- it's a sell-off that is accelerating. It's the final hour of trading -- big volume here now. We're -- we're looking at about three billion shares traded. I'm trying to get an idea of whether we are going to close in on a record there.
And just to give you the breadth of the market, for every stock that is on the rise here at the NYSE, there are seven more that are declining. It's even worse at the Nasdaq. There's 14 for every stock that is declining.
So, it's a very pronounced sell-off. There's no question about it. But there are trading curves in effect right now. When -- when the market starts to gain a -- a lot of points, or to decline rapidly, there are trading curbs to slow it. What you really want is an orderly session. We still have that.
The Dow Jones industrials would have to drop 1,200 points for trading to be halted. So, we're -- we're a long way off from that.
LEMON: Yes, we're a long...
(CROSSTALK)
LISOVICZ: ... I guess that's the best -- that's the best thing I can tell you right now.
(LAUGHTER)
LEMON: We're a long way off, but, I mean, you know, it starts somewhere. And you can see, Susan -- we're watching the board as you're speaking there -- slowly going even more into the negative territory.
Now, Susan, we're hearing that, during the session today, that all the drops came from technology stocks. Shares were dumped there, stocks in other companies that rely heavily on the Chinese demand. That is essentially what is triggering all of this, correct?
LISOVICZ: Right.
Well, we had -- we had this big drop in China. And the Chinese market is one of the fastest growing in the world. So, their -- their -- the Shanghai composite had more than doubled in a year. And, so, that was ripe for a pullback.
You had it come, a very pronounced one, in one day. And there's a lot of money that is going into China. We all know that. And, so, investors were spooked. And you saw it happen. You saw it, as I mentioned, continue to hit all of the major markets in the world.
But another thing that happened here in the U.S. was that we got a -- we got a report an hour before the opening bell on durable goods.
LEMON: Yes.
LISOVICZ: What are they? Well, they are big-ticket items. They range everything from refrigerators and toasters and personal computers to cars and commercial aircraft.
It came in about three times worse than what was expected.
(CROSSTALK)
LISOVICZ: And, so, you have these fears, you know, where investors are trying -- trying to look forward. What is happening with the economy? Oil prices are on the rise again. Not doing much today, but they were over $62 a barrel earlier in this session.
It's a confluence of events, and it triggered a sell-off that a lot of folks say is long overdue.
LEMON: And, Susan, real quick. I don't know if you -- one -- one-word answer, because we want to get some analysis from someone else.
What is happening on the floor now? It's not -- is it chaos?
LISOVICZ: No, it's not chaos.
But I -- I think that -- that I heard a lot of yelling on the -- on the floor when we saw, like, when we saw it go from 240 points to 400-something points.
LEMON: All right.
LISOVICZ: There was a...
LEMON: Susan...
(CROSSTALK)
LISOVICZ: There was a lot of yelling.
LEMON: Susan Lisovicz, don't go anywhere, because we are going to get some more analysis on this.
Thank you.
(CROSSTALK)
PHILLIPS: Ali Velshi just got miked up.
Ali, what do you think? Anything in the news that might be contributing to this? I'm looking through the rundown, looking through the wires.
ALI VELSHI, CNN CORRESPONDENT: Well, no...
PHILLIPS: Anything specific stand out to you?
VELSHI: ... it's not new news. It's momentum. And I'm sure Susan told you some of this stuff.
What happens is, about 1:00, right after 1:00, these trading curbs set in, because a lot of -- a lot of automatic -- automated trading programs sell stocks when stocks go down a certain amount. So, these trading curbs were set up to say that machines, computers can't, all of a sudden, dump the market.
People have ways around that, and who -- they really want to sell out of the market, this is the kind of thing you see. Now, it's very interesting, how we saw this sudden extreme drop to below 500 points lower. That is very serious, because I have been on the phone all day with people on Wall Street, most of whom were taking a lot of this as a buying opportunity.
They are not getting out of their positions, because, when we have seen major drops like this, post-9/11 or in those -- those sorts of days, you saw the smart money getting back in. You don't typically see a bigger-than-100-point drop very suddenly right at a certain point in the day.
Now, a lot of this is automated trading, Kyra. It means that machines are kicking in and saying that, we have hit a point on a stock, that we need to get out of it. There are a lot of people on Wall Street now very busy, in this last 54 minutes of trading, who I have been told are getting involved in trying to buy, which is why you saw this market go a lot lower, and you saw it pull back up while you were talking to Susan, to back into the 400s. It's now back into the 500s.
This is not an isolated incident. I'm just looking at Toronto stocks, down over 400 points in Toronto. We saw European stocks got hit. We had this kickoff.
And, remember, Kyra, they couldn't get it together. Before trading started today, we had bad news in Afghanistan. We had this news from China. We had news on durable goods orders. Then we got home prices. It just came at the market too fast.
We have a lot of positive news today. Consumer confidence is up. We saw positive earnings from some companies. Oil is a little higher, but it's not dramatic.
This is -- there's something wrong here. There's a -- there's a group of people, professional investors, who are losing faith in this market right now. As Susan said, a lot of people think this is oversold, and they're taking it out on the markets today.
PHILLIPS: Well, how do you -- how do you gauge the level of how much trouble we're in if someone were to say, OK, is our economy really in that deep?
VELSHI: Yes.
PHILLIPS: How -- how do you sort of balance out? You're saying there is good news along with this bad news. So, just how bad is the bad news?
VELSHI: Yes.
(LAUGHTER)
VELSHI: You know, somebody asked me a few minutes ago, are people losing their shirts on this? Not if you're not a trader, because, if you don't sell your stock today, you didn't lose anything.
Now, last I checked -- and this is changing very rapidly -- last I checked, for every one stock that was up, 30 or 35 were down. And I'm sure it's worse than that now. The bottom line is, if you are an investor, you're looking for those stocks that people are bailing out of right now.
I have been on the phone with my Wall Street friends all afternoon. I'm telling you, if I thought there was a bigger problem, they would have told me: We're bailing out. We're selling out of this. We're selling out of that sector.
That is not what I'm hearing from the professional traders right now. Now, I can only make so many phone calls, so I haven't got have a full, broad section.
There is not a sense that there's a reason to get out of this market right now. Remember, rumors can trigger these kind of sell- offs. And, sometimes, they get to us after they get to the -- the trading floor. Susan will be checking that out.
But...
(CROSSTALK)
VELSHI: ... there's not an economic problem underlying this market right now.
PHILLIPS: Susan, why don't you tell us about the Nasdaq?
LISOVICZ: Well, the Nasdaq -- well, right now, actually, all three averages are about even. You know, it looked like the -- the Nasdaq and the S&P 500 were worse off than the Dow industrials. But, right now, we're all -- we're looking at -- they are all about down 4 percent on the day.
And I think that, you know, just to sort of echo what -- what Ali is saying, and -- you know, the market has been going basically in one direction since July. It's been going up. The pullbacks that we have seen have been very mild. They have been light volume. And they have been -- you know, there hasn't been a lot of conviction there.
So, this is long overdue, Kyra. And, you know, one of the signs was, -- like, for instance, yesterday, we were talking about a big equity -- a private equity deal, the Texas utility, TXU, utility, being bought out. We haven't -- $45 billion, the value that was associated with this deal. That's the kind of thing that usually spurs investors to buy.
And the market basically just sort of rolled over yesterday. You -- you were getting the sense that this -- this bull market was getting very tired. And this is a -- there was a confluence of events today that occurred that really triggered this market to sell off.
Why it dropped 200 points, in addition to the 200 points that we saw already, I don't know yet. I haven't had a chance to talk to any -- any traders. but I have been talking to a bunch of them all day, and they were all saying this was long overdue -- Kyra.
LEMON: All right, Susan Lisovicz, Ali Velshi, we're going to keep you guys around.
We are going to get a quick break in -- but, at one point today, the Dow Jones dropping below 500 points.
We want to remind our viewers, right there, at the bottom right- hand of your screen, you can see all the figures today from the stock market. We are going to keep that for you. And we're going to check in and talk about what this means to the average person, as far as the economy goes, when we come right back in the CNN NEWSROOM.
(COMMERCIAL BREAK)
PHILLIPS: Let's take a look at the Big Board.
It's looking a little -- now -- and now it's going back to negative 400. You saw the breaking news that happened just within the past 15 minutes or so -- the Dow sliding 500 points in a sell-off -- our Susan Lisovicz and Ali Velshi telling us a lot of fears with regard to China, a lot of tech stocks. It's going up and down.
We are going to stay on top of it. What does it mean for traders? What does it mean for investors like you and me? And what does it say about the state of our economy? Ali and Susan are going to be joining us throughout the hour.
LEMON: Mm-hmm. We have some other stories happening. It's a quarter past the hour. Here are some of the stories we're working on right here in the CNN NEWSROOM.
A suicide bomber attacks a main U.S. base in Afghanistan while Vice President Cheney was inside. Cheney is unhurt. The Taliban reportedly claimed they were targeting him.
Also, the secretary of state, the defense secretary, the Joint Chiefs chairman all in one room -- senators are grilling them on a request for a massive boost in war spending.
And dozens of San Francisco apartment dwellers run into the street after this landslide. Rocks and boulders tumble down, but, amazingly, no one was hurt.
PHILLIPS: Let's get back to stocks and the economy, once again looking at the Big Board.
Ali Velshi there out of New York monitoring what is happening on Wall Street.
Well, it's going back and forth.
VELSHI: Yes.
PHILLIPS: It's sort of -- it's holding in the 400s.
VELSHI: This makes a lot of sense, based on what Susan and I were speculating on a few minutes ago.
Now, we have got a lot of people, both down at the exchange and here, making phone calls to everybody we know to see whether they are buying or selling. But the word that I had, what I was telling you about a few minutes ago, Kyra, is that the people we have spoken to are buying. They are not selling.
They are understanding that there is something going on in this market that is going to create an opportunity. This is not a crash. This is not the bottom falling out of markets. We have strong earnings. We have no indication that, all of a sudden, something is wrong.
The worst-case scenario is, we had a rough market in -- in China, which -- overnight, a 9 percent drop, which spread to the rest of the world, and we had some economic reports that indicated that the economy might be slowing -- not a recession.
So, what has happened here is that, somehow, somewhere, too many people got involved in selling their stocks too fast. A lot of professional traders on Wall Street are taking this opportunity -- and they have got 44 minutes left to do it -- to buy stocks back up again, because you saw every single stock on the Dow down today.
It's very rare. You see this. You see it across the board, the Nasdaq, the S&P 500. So, professional buyers are now moving back into this market. And, basically, they're bargain-hunting. This is the Black Friday sale for stocks.
And that's what I think you are going to be seeing right here. You are going to see an opportunity to pick back up. If you sold your stocks this afternoon in a panic, you lost that money. If you didn't sell in a panic, it looks like people are getting back into this market. This is still no joke, I mean, a 400-point drop on the Dow, Kyra.
I mean, how many years have you and I have been talking about this? This doesn't happen. So, it's serious, but it's not a crash.
PHILLIPS: All right, keep -- keep -- keep updating...
(CROSSTALK)
VELSHI: We are on it.
PHILLIPS: Thanks.
VELSHI: We will tell you as soon as we hear anything.
PHILLIPS: OK.
VELSHI: I do want to tell you one other thing. This is not a U.S.-specific thing. It's been all over the world. Every North American market right now is lower. So, we're tracking it all for you.
PHILLIPS: Well, it started in China, though, started in China, right?
VELSHI: Started in China, 9 percent drop overnight, the biggest one they have had in a decade.
It would have been worse, but for the fact that there are rules in China that don't allow a company to lose more than 10 percent of its value in one day on the stock exchange. So, knowing that, it might have actually been worse than that.
There are also rules on the New York Stock Exchange. And, at 1:00, they kicked in, these trading curbs that stopped automatic selling.
(CROSSTALK)
PHILLIPS: Made everybody nervous.
VELSHI: Which is -- you know, these kind of things -- when somebody says, oh, my God, I can't sell my stocks, I guess some people decided they are going to do everything they can to sell their stocks. And that is what you saw.
PHILLIPS: Ali Velshi, thanks.
(CROSSTALK)
LEMON: Ali Velshi, giving us the world perspective, talking about the markets around the country, following this.
Susan Lisovicz is at the New York Stock Exchange, watching the action there as it happens.
Susan, if I'm sitting at home, what does this mean to me, the average investor, the average person?
LISOVICZ: Well, I think, if you're an optimist, and you have -- and you want to take a little risk, I think that, like -- like Ali said, there's a lot of great companies out there that are selling off steeply.
And this could be an opportunity. But I think, when you have something as pronounced as -- as this, you have to examine why it is that the market is selling off. And there have been a number of events that would -- that are serious.
You have a place that's been getting a lot of money, like China, for instance, that has been shaken down. Nine percent in one day is a serious drop.
LEMON: Yes.
LISOVICZ: We -- that was worse than what we saw on Wall Street after the markets reopened in 2001.
The U.S. economy is slowing down. There's some concerns about it. Oil, meantime, is rising. But, for the average investor, you have been on a nice ride since July. I'm not saying that it's going to be any easier for me or you, but what I'm saying is that the market has had a very nice rally for the last eight months or so.
LEMON: Yes.
LISOVICZ: And so a one-day pullback may not affect you significantly.
It's not going to change your retirement plans. But, if we have a prolonged pullback, that's a different story. I mean, I think that the market may have hit bottom when the Dow dropped...
LEMON: Yes.
LISOVICZ: ... 500 points. But it's still -- no question about it, it's a convincing sell-off by every measure, and a lot of folks say much needed and long overdue.
LEMON: Yes. And, you know, a lot of people, their retirement stocks and bonds tied up in the stock market. So, when something like this happens, people get very concerned, for obvious reasons.
Susan, you're above the floor there, if you can look around and see what is going on. Before, you -- people were yelling, and so that made you look at the board. And then now we have these investors coming in and bargain hunting, as Ali said. So, that picked it up a little bit. LISOVICZ: Yes.
LEMON: So, I imagine things aren't as chaotic.
LISOVICZ: I think that one of the things that -- what you always want to ask is: Is there panicked selling? Is this some kind of thing where you really have people who are just throwing down their stocks?
And I think that, you know, it sort of had that sign there at the top of the hour, when you saw this -- you know, you just really saw the market just fall so quickly.
But, again, Don, it would take a lot for this market to close. There have been curbs that comes on the upside or downside, when you have a lot of power on the up or down side. But, for the market to close, you would have to have a 1,250-point drop. We're no -- we're nowhere close to that for the Dow industrials.
LEMON: All right.
Susan Lisovicz, thank you for your expertise. We will be following this until the closing bell right here in...
LISOVICZ: Yes, I will be back with you.
LEMON: Yes, right here in the CNN NEWSROOM.
Also with us very shortly, Gerri Willis, who is our financial editor here at CNN. She is going to give us her perspective on this.
PHILLIPS: And we are told Larry King was able to book financial guru Suze Orman for tonight on "LARRY KING LIVE." So, tune in. She will have a lot to say, of course, about what has happened with these numbers.
Also straight ahead: shocked from slumber. Ahead in the NEWSROOM, the latest from San Francisco, where residents were shaken up by a sudden overnight landslide.
(COMMERCIAL BREAK)
PHILLIPS: Stocks taking a dive -- it's getting a little bit better.
Ali Velshi, we said it started in China, worked its way around, until it got to the U.S., and got us all worked up for a bit.
VELSHI: Well, it's still getting some of us worked up, because we're trying to figure out exactly why this thing went from being a couple hundred points lower.
And we have been following it all day. And it was 100 points almost right off the top. And it sort of kept going down. And then it sort of hit the 300-point level late this afternoon. And we have been working the phones. And, all of a sudden, this thing drops. The floor drops out of it. And the market is more than 500 points off, which is very, very, very unusual. It's very unusual to see 300 points.
So, all of a sudden, it's come back. We were working the phones and finding out from our friends on Wall Street that they were taking this as an opportunity to get into stocks, because there isn't a fundamental reason why this market is doing what it's doing.
As Susan has been telling us, there is some sense that, with all of the records that we have set, some more than 30 records since October, since the Dow got back to an all-time high, there is some sense that there was too much going on in the Dow, and the investors wanted to sort of soften their positions a little bit.
But to see something sudden like this means that there are a few things at play. And one of them was that, between the attacks on the air base in Afghanistan, the sell-off, that almost 10 percent sell-off in China, the durable goods orders that came in this morning that says American businesses are buying less of the big-ticket items...
PHILLIPS: OK.
VELSHI: ... and then the housing prices, all of that stuff added up. And traders couldn't get ahead of it.
This thing just started selling off. People who had any reason to doubt were just bailing out of stocks.
PHILLIPS: And, so, people -- for people like you and me, if you're not a trader, you're not in trouble?
VELSHI: Correct.
If you didn't sell your stocks today, you didn't lose anything. You don't lose unless you sell. So, if you didn't panic, there's no indication that -- some of this is going to be recovered. I mean, can you imagine if you sold when the Dow was down 500 points? It's already made up -- it's made up more today than -- than most months on the Dow.
So, again, this is a volatile market. For amateurs like us, you should sit on the sidelines and talk about it. Don't -- don't -- don't -- don't pull the trigger on sales right now.
PHILLIPS: Thanks, Ali.
LEMON: All right. Susan...
(CROSSTALK)
LEMON: Susan Lisovicz, watching it all from the New York Stock Exchange.
Susan, what is going on?
LISOVICZ: Well, you know, I wanted to echo something that Ali was talking about before.
When you see the kind of sell-off that we have, and it keeps accelerating, there's a certain point when automatic program trading kicks in, when certain averages hit certain levels.
And one trader that I was just talking to said that the S&P 500, which is the broadest of the three, the Dow, the Nasdaq, the S&P 500, hit 1400, a whole bunch of program trading kicked in, which further accelerated the selling, which is why we saw that really sharp drop -- it was already a dramatic sell-off -- and why we saw the Dow drop 500 points.
And, of course, it's pulled back a little bit. But that's one of the reasons.
Ali alluded to it. We see it a lot. We just don't see it happen as dramatically as we do today. That's one of the things. I just wanted to add that.
LEMON: And, Susan, consider this for the next time, because I want to know, does this say something about just how tenuous our economy may be, when people get all worked up when we have a drop like this?
So, we have got to move on, because we have some breaking news. But I am going to ask you about that. We're going to...
(CROSSTALK)
LISOVICZ: OK.
LEMON: Susan Lisovicz and Ali Velshi, they're going to stick with this until the closing bell happens, this breaking news on Wall Street.
Now let's head to the NEWSROOM.
CNN's Betty Nguyen is working on a developing story.
What do you have for us, Betty?
BETTY NGUYEN, CNN CORRESPONDENT: Well, there's a fire that we want to show you. It's pretty amazing, at least the pictures coming out of northeast Houston.
Check this out. Look at that black smoke up into the air. Well, the reason is, this is a salvage yard. A lot of cars, dozens upon dozens, are on fire -- firefighters obviously on the scene, as you're looking at these live pictures.
Maybe they can zoom in a little bit closer, and you can see how many of these cars are just fully engulfed in flames, not those, but the ones behind them. There you go. There are some pictures of them.
And it appears like this may be burning for quite some time, because these cars, obviously, have tires and oil and perhaps even some gasoline in them, but causing a lot of work for firefighters there in northeast Houston today.
We don't know what caused it. And we don't know about any injuries. Hopefully, there aren't any injuries, but firefighters obviously fighting this from above and from afar, just because this could spread pretty rapidly, with all the cars so close together.
But, again, a fire in northeast Houston at a salvage yard, we're watching it for you. And we will bring you the latest -- Don.
LEMON: Yes. News keeps happening, and we will keep bringing it to you.
Thank you, Betty Nguyen.
NGUYEN: Mm-hmm.
PHILLIPS: And we continue to follow the markets, as well, as the Dow just tanked into the negative 500 -- right now, minus-370, 371.
Our Ali Velshi and Susan Lisovicz are going to bring us more on the historical perspective and what this means to us and to our economy. So, stay with us.
Also, if you would like to see live quotes on the stocks you're interested in and more in-depth numbers on the market, go to the new CNNMoney.com. Get analysis and see the real causes for today's dive. Get more at CNNMoney.com.
We're back in a moment. You're watching CNN, the most trusted name in news.
(COMMERCIAL BREAK)
PHILLIPS: Hello everyone, I'm Kyra Phillips live at the CNN World Headquarters in Atlanta.
LEMON: And I'm Don Lemon, just reading the latest stories on Wall Street and that's what we're following here today. Wall Street springs a leak. What it means for you? We're racing toward the closing bell right here in the CNN NEWSROOM.
PHILLIPS: Let's take a look at the board as the Dow takes a big dive. Ali Velshi watching it all for us. Ali, what's the latest?
VELSHI: Well right now as you pointed out earlier it's a fluctuation. We are now back again lower but worse off than 400 points. A 408-point loss on the Dow. This has been all over the place. We went from a day where we were in the hundreds into the 200s and we crossed 300 and all of a sudden we saw it move to beyond 500. We then saw it pull back into the 300s. Now I want to just give you some perspective on this. Anything more than 382 would be one of the biggest declines we've ever seen on the Dow. The biggest one was on September 17th of 2001, which is the first day of trading after the September 11th attacks. On that day the Dow dropped 684 points. But we haven't seen anything like that on any other kind of day. We've seen three drops, the biggest one so far has been 382. We're well beyond that right now.
PHILLIPS: I'm just getting word Ali that the president actually of the United States is monitoring this drop as well and paying attention.
VELSHI: Yes.
PHILLIPS: So you're saying the biggest decline ever was right after 9/11, back on September 17th?
VELSHI: And right now we're at the second biggest decline ever. But again, on September 17, 2001 you had some fundamental reasons to think that the American market was a potentially dangerous place to invest in. You might have, you might not have. Today, you don't. There are some things going on in the market that might make you think that you might want all of your money invested or not all of your money invested. There is nothing that suggests this market needed to take a 500-point drop in one particular day. There's a lot of things at play here which probably shouldn't alarm the average investor too much right now. The best advice that I can give the average investor right now, I'm not in the business of giving advice. The best advice I can pass on to the average investor from people we've spoken to is just sit tight for a little bit. Don't go selling things into this market because once you sell, you sell when the market is down 400 points, that's it, you've locked in your loss.
PHILLIPS: All right, Ali Velshi, we'll keep checking in with you, appreciate it.
LEMON: We're going to keep watching this story. We also have some breaking news coming out of Florida. Let's head to Florida now outside of the courtroom, Susan Candiotti joins us from West Palm Beach. Susan, what's the new news?
SUSAN CANDIOTTI, CNN CORRESPONDENT: Don, the news is that the fourth district court of appeals in the Anna Nicole case has decided not to decide for the time being. Instead, it has scheduled oral arguments, a hearing for tomorrow at 9:30 in the morning eastern time. Each side in this case will have 20 minutes to present its case. The sides are Anna Nicole's mother, Howard K. Stern's attorney, an attorney representing possibly an ex-boyfriend. He may or may not appear. As well as an attorney representing the interests of the baby Dannielynn. Now, basically, it comes down to whether Anna Nicole Smith should be buried in the Bahamas as her mother wants or as the guardian wants in the Bahamas. He says that was the wish of Anna Nicole Smith. Now generally after these hearings and this one should last approximately an hour or so, this court, a three-judge panel, usually takes a recess, comes back and makes a decision. But then again, Don, nothing about this case has been usual. Back to you.
LEMON: All right. Thank you very much Susan Candiotti for that. We'll check back.
PHILLIPS: What's a little unusual on Wall Street if you look at just the number of times that we've seen the declines with regard to the Dow. Ali Velshi is still monitoring the number for us right now, minus 425. The second biggest decline since 9/11. Ali?
VELSHI: Yeah. And this is again the second biggest decline since 9/11. What's relevant maybe for investors today is that all of the gains for 2007, all of the stock market gains, all of those day after day me talking about a new record on the market and Susan talking about that, gone. All of that and more. This is a substantial decline on three markets in the United States, major markets, on markets all over North America. I was just looking at the numbers from North American markets, they are all down right now. This is an across the board decline, which tells you it's not about that U.S. housing market. It's not about a U.S. housing report. This is a generalized fear of over inflated markets. It started, got kicked off in China overnight, spread to Europe, jumped the pond, got to the U.S. and before markets had a chance to open at 9:30 this morning, there was already too much bad news piled on. There were more sell orders than buy orders. There were some 30 or more stocks down for every one -- that somebody wanted to buy. That's the problem we've got. I'm really working to get to the bottom of this. But I think in the end we're going to find out that there are a lot of technical things at play in causing this market to be down. This is -- normally when a market drops like this on every single day that Susan and I have worked where we have seen 200 point drops or 300 point or more drops, there has been a very good reason, we could pinpoint it, we could find out what it was. We are getting sort of puzzled responses from some people today.
PHILLIPS: Well investors at home too are wondering do I get out of the market.
VELSHI: No, and I think one has to be very careful right now because the only loss you take is when you sell your stock. There is nothing -- the bottom is not dropping out of any stocks right now. This is a widespread decline. I think before you make decisions to buy or sell stocks you need to find out why it is you're buying or selling, what the problem is. Right now, the word from Wall Streeters we're talking to is that they're buying and you can see that on the screen. If the market was down 500 points less than half an hour ago and it's now down 380 points that means a lot of people with a lot of money are buying stocks, not selling them right now.
PHILLIPS: Thanks, Ali.
LEMON: All right, thanks Ali. And you know Gerri Willis who is our personal finance editor here, she's going to weigh in on that very subject in just a short time.
We want to get to the stock exchange, the floor. Susan Lisovicz joining us there. Susan, tell us what's going on?
LISOVICZ: Ali illustrated why the market is selling off. But one of the questions that I think that we all asked at the top of the hour was why we saw a vertical plunge in the Dow Industrials. One trader I talked to said well you know automatic programs do kick in. But I can tell you that just outside of camera range, the top officials from the New York Stock Exchange, including the CEO John Thaine, all gathered around to see -- to examine why the market dropped. There may have actually been a technical glitch here. This is the world's largest stock exchange. It can handle a lot of volume but they said they have not ever seen anything like it where it just simply was a vertical plunge. I can't say that there was a technical problem but they're actually looking into it because they don't know. There may have been.
LEMON: Ok Susan, again, you said that leaders were just on the floor, just out of your camera range and again, what happened?
LISOVICZ: Well, they can't account for why the Dow dropped 500 points. It was down about 240 and then it just dropped another couple of hundred of points. Some of the traders here were saying there may have actually been a technical problem. In addition to the fundamental problems why the market is selling off. I went over to that crowd. I talked to the CEO, John Thaine, I said is there any reason why the market dropped like that so suddenly? He said we're trying to figure it out. There may have been a problem. I can't say that there has but they're looking into it. There may have been a technical problem why we saw such a drop like that.
LEMON: And then the big question would be well then, was there a real drop? Then what do you do? How do you adjust it? So these are all questions to be answered Susan. Looking around the floor there, can you look around and tell us what's going on, what folks are doing, some of the traders on the floor?
LISOVICZ: Well, I think it's, you know, it's basically back to normal and that is most of the day it's been orderly trading. I think when the Dow dropped 500 points and it dropped so suddenly, it wasn't going incrementally. That's when people started to shout. Basically they want to know why is that. Is there something else that happened? We know about China, we know about durable goods, we know that oil prices have been rising. We know that the market was really overdue for a pullback but was there something else they didn't know about? I think that was one of the reasons why people were shouting. Now, it's gotten to the point where I think that the officials here, the top officials from the NYSE, are trying to figure out themselves, what exactly happened at the top of the hour. Was there more than just the market bottoming out and that the market had accelerated to the point that we saw such a dramatic point loss at that moment.
LEMON: Susan Lisovicz on the floor of the New York Stock Exchange. Of course, do not go anywhere. We're going to be checking back with you. Thank you so much.
LISOVICZ: You're welcome.
PHILLIPS: Our personal finance Editor Gerri Willis is going to join us too and weigh in on what's going on. We're going to continue to stay on top of everything here at the New York Stock Exchange. Stay with us, more from CNN NEWSROOM straight ahead.
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LEMON: All right, we're following some breaking news here, a big drop in the stock market. At one point it had fallen below 500 points, sending a shockwave through Wall Street. Also weighing in on this drop, the president of the United States saying he is monitoring the markets. Let's check in with our Ali Velshi who is in New York. Ali, the Dow is affected. Does this affect the NASDAQ as well or we're just looking at the Dow here?
VELSHI: Oh yeah, absolutely. In fact the NASDSAQ, for most of the day has been a much worse performer from the Dow. From a percentage perspective you're looking at about a 400 point drop right now on the Dow, that's about 3 percent. The S&P 500 which is a much broader measure, probably has more to do with people's 401ks and things like that, is down even more, 3.3 percent. The NASDAQ's down 3.4 percent. So all the markets are being affected in the United States, across North America and South America right now. We saw a drop which we just showed some video of it a little earlier, about an hour ago where the Dow was down 530. Look at that, 537 percent -- points, I mean. Now I just want to give you some perspective on that. On the day that the stock market opened after 9/11, so it was September 17th, 2001, remember that day well, 684 points, that's the biggest point drop that the Dow has ever had. The biggest one after that was 382 points. So we are now right around the point where we're at the second biggest drop ever.
As Susan has been pointing out, she's on the floor of the New York Stock Exchange, she's talking to people. There are a couple of things that you need to remember. One, this market has gone straight up for about eight months. So the fact that it goes down, even though it's a big number, that's something to think about. The other thing is that all of the gains for 2007 on all major North American markets are now gone. We now have to make up that ground. But we have been talking to people who are saying this is not a selloff that we need to worry about as a long-term problem.
LEMON: And Ali we're approaching the closing bell here, so we're going to monitor that, we're going to check in with Susan Lisovicz a little bit later on. And we want to tell people they can go to cnnmoney.com which is where that shot was that we showed you earlier that showed that drop to 500 and now slowly creeping back up but not by much. Thanks Ali.
PHILLIPS: Our personal finance editor Gerri Willis is joining us now to weigh in. Susan is talking about a possible technical glitch Gerri, so if indeed that caused this, what does that mean?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well I'm telling you, for most of us, for regular investors who are relying on stocks for our 401ks, our IRAs to put our kids through college, this isn't something you want to panic over. It could have been a glitch in the market as Susan is describing right now. We really don't know. And it's not the kind of reason that you want to sell. If you're going to sell stocks, you want to do some analysis and understand why you're selling. Look, as Ali has been reporting, this stock market has been on fire. It was due for some sort of correction. This isn't a time to panic. If you're going to do anything, Kyra, I would say now is the time to sit back and evaluate exactly how you have your money saved. So many people have money in a number of mutual funds, they really don't know what they own, and it's a great time to go in and say do I have the right amount of money in stocks, in cash, in bonds, in real estate? Make sure your mix is appropriate for your age. Because I have to tell you, selling in a panic is almost always a mistake. Because you end up selling at exactly the wrong time.
PHILLIPS: Ali was saying that he was seeing a lot of selling within the tech stocks. So when you go to see your personal advisor, personal finance advisor, what are those exact questions that you -- I mean, how direct of questioning do you need to conduct?
WILLIS: Well, I mean, if you have an advisor and so many people use themselves as an advisor, frankly, you definitely want to ask them the tough questions. But I have to tell you, financial advisors don't control the markets. On a day like today the kind of movement we've seen today, they certainly can't control that so do your own analysis, be comfortable with your own investments and don't panic.
PHILLIPS: Thanks, Gerri.
LEMON: The closing bell less than 15 minutes away. Let's go back to the floor of the New York Stock Exchange. Our Susan Lisovicz talking to some traders there. Susan, what have you found out?
LISOVICZ: Yeah, and believe me, trying to corner a trader at this moment is a very tricky business. Teddy Weisberg has been here for 38 years. Put this in perspective for us. How big is this selloff?
TEDDY WEISBERG, SEAPORT SECURITIES: Well I think it's a meaningful selloff but it's not unexpected. I mean the market has been actually acting a little squirrelly for about a week and a half now. A lot of the big stocks had rolled over. The market has been up almost up in a straight line since the end of last summer. We haven't really had a major correction. You don't always know what the catalyst is going to be. But obviously, maybe between Greenspan's comments and what happened in China overnight, and maybe in Iraq with the bomb near Cheney, but it kind of all came together at once for whatever reason and here we are down 3 or 400 points.
LISOVICZ: The Dow when it dropped 500 points that was a vertical line it seemed and there was a lot of shouting on the floor. Can you describe what happened at the top of the hour?
WEISBERG: Well it was mostly all driven by programs. I understand that stop orders were hit in the S&P futures which triggered the sell orders. In the new hybrid environment without a lot of special participation, you know, the stocks are basically going to be in freefall in an environment like that and of course they can go up the same way.
LISOVICZ: There's a big crowd right outside of camera range where folks are trying to figure out why the market dropped so suddenly. They can't put their finger on it. Is there any possibility you think that there was a technical glitch? That there was like basically a gridlock in the system?
WEISBERG: Oh, no. I think it was pretty much what I just suggested to you. I mean, I'm not certain, but I am told that stop orders were triggered in the S&P futures which triggered sell stop orders here and it was a lack of bids and the market traded off 150, 200 points a straight line.
LISOVICZ: For the average investor out there looking at these numbers which can be frightening, is this something to be frightened about?
WEISBERG: Well, I would say trading stocks is always a risky business, no matter what the environment. But in the new world where speed is more important than the quality of execution and everything is about speed, what you get with speed is a lot of volatility and today is a perfect example of that.
LISOVICZ: Are we going to have a bounce back tomorrow do you think?
WEISBERG: Well, let's hope so!
LISOVICZ: Ok, Teddy Weisberg, thank you so much for spending some time. Don, it was not easy to corral Teddy! He has a lot of orders in his system right there! I had to physically threaten him to stay here!
LEMON: Yeah, we can imagine what's going on there Susan. Probably rattled a lot of folks nerves. Teddy has been there for 30 years so I'm sure he's got nerves of steel --
LISOVICZ: He's seen at all.
LEMON: It's a little scary.
We have to wrap because we have to do some other things, but we're approaching the closing bell, Susan we'll check back. Thank you.
LISOVICZ: Ok, thank you.
PHILLIPS: And if you'd like to see live quotes on the stocks you're interested in and more in-depth numbers on the market just go to the new cnnmoney.com and get analysis and see the real causes for today's dive. Get more at cnnmoney.com, we're back in a moment. You're watching CNN, the most trusted name in news.
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PHILLIPS: We're getting close to that closing bell. We've been following the Dow taking a dive. Ali Velshi we have about a minute here to update our viewers.
VELSHI: You know I was just thinking when in the time we've ever worked together, Kyra, would I say that it's good news that the Dow Jones is down 370 points. I mean this thing less than an hour ago it was down 537 points. It's one of the biggest drops we've ever seen from a point perspective. It's useful to remember though that the Dow has been at record levels. So from a percentage perspective this isn't as big as it used to be. There is also way more money in this market. So when somebody decides that they want to buck the trend and start selling like they did today, the effect is going to be more exaggerated, it's going to be bigger and that's what we saw. But what we also saw, is that at a 530-point decline a lot of smart folks decided this is a buying opportunity, this is bargain hunting. This is a black Friday sale when it comes to stocks. And you saw people buying in. We've been calling our people on Wall Street and they're saying the same thing that it's unclear why this market would have dropped as much as it did today, but it is very clear that this market was going be down today, a hundred points, maybe 150 points. It should never have been down 500 points. And as a result people are taking this as an opportunity to buy stocks. Remember, if you didn't sell stocks when they were down when the Dow was down 500 points you didn't lock in your loss. Things might look ok. Everything we're hearing is that this is not going to continue.
PHILLIPS: Good deal. Thanks Ali.
LEMON: All right, more on that possible glitch. Susan Lisovicz on the floor of the New York Stock Exchange. Susan, update us please.
LISOVICZ: Well, you know I'm hearing from a lot of folks including Michael right now, you're having problems executing orders. Tell us Michael.
MICHAEL: I haven't been able to execute an order since 3:42. I have about 15 orders in my machine. I haven't been able to do anything.
LISOVICZ: You've been here 24 years, have you seen anything like it?
MICHAEL: Never, this is the first time I've ever seen anything like this. The market really is really getting killed. It brings back memories of 1987 where on the NASDAQ side you couldn't get anything done. But over here we were able to trade. Right now we're not able to trade.
LISOVICZ: You're talking about the 1987 crash when the volume was so great that the system wasn't able to accommodate all of the orders?
MICHAEL: That's right.
LISOVICZ: Ok, and what are you hearing? Why is that? Why are you not able to trade?
MICHAEL: That, I couldn't tell you. I don't know if it's that they just got overflowed. The system got overextended, I don't know. But I mean the volume is pretty big today. We're down pretty big and since 3:42, like I said, I haven't been able to execute one order.
LISOVICZ: Michael thank you very much. Michael Pizzo who's with Naben Securities and a veteran trader here, Don. So just to make matters worse, not only are we having a big, big selloff, we're having some trading problems. One of the sources I talked to a little while ago said that he was hearing that a Dow Jones server went down that created some feeder problems so that when they were able to get that working there had been a bottleneck and that also is one of the reasons why we saw the Dow drop so dramatically at the top of the hour. It's very noisy on the floor, a lot of people are very upset because they're not able to execute orders right now. Back to you Don.
LEMON: All right, Susan Lisovicz on the floor of the New York Stock Exchange. We'll have a wrap-up shortly.
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PHILLIPS: Closing bell about to ring on Wall Street. It's been a busy and interesting day.
LEMON: Yeah, Susan, take it away.
LISOVICZ: All right Don and Kyra, well there is applause and there is booing for this closing bell. Why is there booing? Well one of the reasons why is that a lot of traders have been complaining about they haven't been able to execute orders so on top of all of the other issues that come with a big selloff, and we're talking about a selloff that we haven't really seen since the markets reopened after the September 11th attacks. We're talking about what could be record volume here. A lot of folks are very happy to call this an end. And they're going to be issues that are obviously going to continue into tomorrow as to whether this is a one day affair or just a phenomenon. Now there is big booing on the floor. I just want to say that very quickly, because of some technical issues. Now let's go to "THE SITUATION ROOM" and Wolf Blitzer.
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