Friday, the Dow dropped nearly 140 points, closing at 10,380, while the NASDAQ was down 54, closing at 2,265.
More volatility may be ahead.
"It does affect people's confidence. It's actually an argument in favor of being a long-term investor because if you try and actively trade this stuff on an everyday basis, you can run into problems like this," said Kevin Cook of Peak6 Investments.
Attention turned Thursday to S and P Futures trades at the Chicago Mercantile Exchange Group, but attention turned back Friday to New York and Washington as the Securities and Exchange Commission investigates Thursday's dramatic drop in the markets.
CME Group issued the following statement Friday:
"Upon review of yesterday's trading activity in CME group markets, we have concluded that we did not experience technology or systems issues associated with trading activity between 1:00 and 2:00 p.m. CST. Additionally, it does not appear that CME Group clearing firms or customers experienced any significant technological failures or trading errors during this timeframe."
Investigators say they are considering how computerized trading may been involved in Thursday's drop. Some traders say the computers are not the problem, but simply trades that are overly leveraged.
"A lot of money has been made through leverage on the way up. On the way down, as that leverage starts working the other way, the brokerage firms have to ask for margins. You have to come up for the money to pay for your position. A lot of these guys can't. So, there is forced selling," said Tim Mulholland of China America Capital Company.
The complicated system of trading and investing may be too much for many people. Analysts say Thursday was a good example of why most investments should be long-term investments.
"I actually think it was a one day in time, one moment in time issue. I don't think it's systematic and something you should be concerned about in terms of the bigger issue that will plague us this summer," said Mellody Hobson of Ariel Investments.
It's unknown exactly what caused the Dow to drop nearly 1,000 points in a matter of minutes Thursday, but investors were watching the market closely the next day.
Meanwhile, employers added 290,000 jobs in April, the most in four years. But the national unemployment rate rose to 9.9 percent because people out of work but not searching for a job are looking for a job. President Barack Obama said Friday morning he is encouraged by these numbers.
"These numbers are particularly heartening when you consider where we were a year ago with an economy in freefall," he said. "At the height of the downturn, we were losing an average of 750,000 jobs per month."
President Obama says regulatory authorities are looking into Thursday's wild swings in the stock market in order to protect investors.
On Thursday afternoon, the Dow was already down 300 points in response to the financial crisis and protests in Greece. Then came six minutes and a quick downward spiral. At 1:42 p.m. CDT, the Dow was down 140 points. Two minutes later, down 516 points. Two minutes after that, down 707. By 2:48, it was down 995 points.
"Yesterday, what you had was a perfect storm," said John Brady, senior VP AMF Global. "So you had a market that had rallied a lot, so people were looking for a correction. You had the Greece factor, which is still a factor today. I mean, we still have fear in Europe, and we don't know what the ECB is going to do to handle it. We had parliament elections in Great Britain."
Besides the volatile market overall, many are blaming a fat finger. The group says despite reports that a trader may have hit a "b" for billion instead of "m" for million, it does not appear there was any trade errors. The bottom line is, what does this mean for you?
"It means very little," said Jeffrey Carter, Pointsandfigures.com. "You might see your account value go down marginally in your 401k plan, but I think it was a one-day in time issue."
For many people, that is the bottom line. That is what they care about. They want to know how it will affect them. Some traders said they are calling for more federal regulation to prevent unethical trading.
The Associated Press contributed to this report.
