It couldn't have come at a worse time for Wall Street, which has suffered big losses over the past week as investors become increasingly more worried about Greece's debt issues, despite a massive bailout plan.
The Dow Jones Industrial Average plummeted 900 points during the course of just one hour and 40 minutes, the biggest fall since the 1987 crash.
But the index managed to recover most of the losses by the closing bell with an overall loss of 347 points, or 3.2%, to 10,520.32. However, this is still the largest percentage drop since April 2009.
The Standard & Poor's 500 index also fell 37 points to 1,128. A massive 3,002 stocks on the New York Stock Exchange fell, while only 173 stocks rose, with trading volume coming in at 2.67 billion shares.
American news service CNBC has reported financial group Citibank inadvertently caused the crash after a trade sold off 15 billion Procter & Gamble shares by mistake, when that figure should actually have been in the millions.
"We aren't in a position to comment on the details of an individual trade today but we believe the trade was an error," the company told the Wall Street Journal in a statement.
This error, dubbed a "fat-finger" trade, caused the largest sell-off since the 1987 crisis. Procter & Gamble shares plummeted over 20%, with investors saying they were unable to determine how much a stock at other companies was worth due to the outrageous overestimate.
But while the Dow managed to regain most of its losses during the day, the incident still highlights how volatile financial markets are to the ongoing debt problems in Greece, even with the new debt plan to be implemented.
Last week European Union leaders and the International Monetary Fund hashed out a bailout plan for the company worth about $US140 billion, with Greece to couple that with massive spending cuts. But investors are still worried the country could default on its debt.
The Dow Jones Industrial Average lost 647 points last week, or 5.79%. But investors are also worried the damage could extend to Australia – the ASX200 lost 308.3 points or 6.32% to 4573 during the past five trading days.
Today, the ASX200 opened with a drop of 75 points, or 1.64%, to 4498.02, again fuelling investors' fears.
The problems started well before the financial crisis. Years of cheap lending, overextended spending and a lack of financial regulation caused Greece to be badly exposed to the financial crisis.
National debt, which currently sits at about $US413 billion, outstrips the nation's economy and could reach 120% of GDP as soon as this year, according to some analysts. Currently the nation's deficit sits at 12.7% of GDP.
Greece's credit rating has already been downgraded, providing even more struggles for Prime Minister George Papandreou as the country attempts to repay debt with higher interest rates. On top of that, riots across the country are growing increasingly violent as the administration attempts to cut back on spending in order to service debt.
As a result of all of this, investors on Wall Street are growing increasingly worried that a default in Greece could cause another financial crisis.
While the Australian economy has remained especially resilient during the last 18 months, the United States is nowhere near as strong, and could still be susceptible to a massive crisis spreading across Europe.
Consumer confidence, initial housing starts and vehicle sales have showed early signs of improvement, but unemployment still sits at 10%.
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