AMTD TD Ameritrade Holding Corporation

By Daniel Huang, Kirsten Grind and AnnaMaria Andriotis 

To Christina Elizabeth, it was "a life-changing 20 minutes."

The painter from Phoenix was one of millions of Americans who watched in horror as the U.S. stock market sank like a boulder Monday morning, a plunge that topped more than 1,000 points before many investors had finished their breakfast cereal.

Ms. Elizabeth, 31 years old, tried in vain to sell at least some of the shares in her TD Ameritrade Holding Corp. account, but was unable to log in amid a crush of others rushing to do the same. By the time she was able to access the site, she was down $6,000.

"It might not be a lot of money to some people," said Ms. Elizabeth, "but as a young artist trying to get somewhere, this hurt a lot."

Many investors could feel her pain on Monday, as the Dow Jones Industrial Average ultimately finished down 588.40 points, or 3.6%. That brought the benchmark's losses since the close of trading on Thursday to 6.6%, a downward spiral caused largely by fear of a slowdown in the Chinese economy.

The market turmoil in recent days has sparked a flurry of activity as institutional and individual investors alike tried to navigate the wild movements in stock prices. Financial advisers, almost unanimously, have cautioned clients not to panic.

"What this is not is a repeat of 2008," Chicago financial adviser Steven Dudash wrote to clients Monday morning. The president of IHT Wealth Management, which has about $650 million of assets under management, Mr. Dudash said he spent most of the day talking to clients and trying to calm their nerves.

Many said it was difficult to stay calm as markets dropped at the open, regained more than 800 points and then dipped at the close.

Like those at TD Ameritrade, clients of online brokerage Scottrade Inc. reported problems logging on to their accounts and executing trades early Monday. Scottrade nonetheless experienced a 230% spike in trading volume, compared with the daily average month to date. on Monday morning, a spokeswoman said. A TD Ameritrade spokeswoman blamed the difficulties on the "historic activity" Monday morning and a significant increase in trading volume. Shesaid the issues were resolved shortly after 10 a.m. on the East Coast.

Many people said they were flummoxed by the dramatic moves, which were unusual for late August and came in the absence of any apparent catalyst.

"I just keep thinking, 'What new information did we get?" said Erik Oliver, 42, an attorney in Redwood City, Calif. "The Chinese market has been falling all summer. Why is everyone overreacting so much?"

Despite the volatility, Mr. Oliver said that he is "staying the course" and put an additional 1% of his portfolio into the stock market last week, and again on Monday, through Vanguard Group index funds.

Mutual-fund firms Vanguard and T. Rowe Price Group also experienced intermittent outages on Monday due to increased traffic.

Vanguard Chief Executive and Chairman F. William McNabb III said the giant asset manager, with $3 trillion under management, called in its "Swiss Army" of staff as investors besieged the firm with questions about the stock-market rout.

Mr. McNabb said in an interview that a flood of inquiries overwhelmed the company's call center and forced executives to pull volunteers from across different divisions of the company to handle questions.

The volunteer group is known inside the firm as the "Swiss Army" because of its ability to step in quickly during a crisis. All employees ranging from portfolio managers to executives are trained to answer investor calls. "We had lots of people manning the phones but we still found ourselves challenged to answer the phone very quickly," Mr. McNabb said.

Mr. McNabb said Vanguard was planning to publish several investor communications on its website, including a piece that the firm has largely recycled from the market volatility just ahead of the 2008 financial crisis. The article, he said, would make several points, including urging investors not to panic, not to abandon stocks and bonds and not to make abrupt changes in their portfolio construction.

"I still believe that these are the right points now," Mr. McNabb said.

The issues at T. Rowe Price were ongoing late Monday. A spokesman said, "Our associates are working as quickly as possible to rectify the situation, and we apologize for any inconvenience this has caused."

Asset managers and financial advisers speculated that one reason behind the surge in client inquiries was the advent of apps and other mobile technology that allows investors to stay constantly connected to market activity.

Bill Stone, chief investment strategist at PNC Financial Services Group Inc.'s asset-management group, says the Monday morning call he generally holds with financial advisers had more than 300 participants, or 50% more than usual. He said more clients have been contacting advisers, concerned about how the latest market losses could be a repeat of 2008.

"The swiftness of the decline brings back bad memories of the financial crisis," he said. "I think we're going to be haunted by those memories for quite a while in the sense that people automatically ask: 'Is this the start of that again?'"

Michael Wursthorn

contributed to this article.

Write to Daniel Huang at daniel.huang @wsj.com,

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(END) Dow Jones Newswires

August 24, 2015 20:03 ET (00:03 GMT)

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