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For what's usually a boring August, the stock market today – and, this week – has kept traders busy…
The alert read: "Due to issues with quote dissemination to the UTP, SIP, NASDAQ BX and PSX are halting trading in Tape C securities until further notice." A second alert was sent at 12:28 adding that Nasdaq halted options trading.
Trading resumed in a handful of securities around 3:10 p.m. By 3:25 p.m., trading was restored in all equities, with option trading picking up again at 3:40 p.m.
Amid the chaos, Money Morning Chief Investment Strategist Keith Fitz-Gerald advised readers to "take a deep breath" and keep calm.
"This is definitely a frustrating development and one that highlights how fragile the financial wizards have made the system. For all the sophistication of today's trading, market prices are still a matter of buying and selling," explained Fitz-Gerald.
Some 3,200 securities, 110 (22%) of them S&P 500 members, are listed on the Nasdaq. Names run the gamut from heavily traded companies such as Apple Inc. (Nasdaq: AAPL), Cisco Systems (Nasdaq: CSCO), Google Inc. (Nasdaq: GOOG), and Microsoft Corp. (Nasdaq: MSFT) to a cache of small caps.
The nearly three-hour long interruption meant that investors, traders, and market makers had extremely limited, if any, access to buy and sell thousands of securities. And because so much of today's market trading is intertwined, the implications are far-reaching.
"IBM (NYSE: IBM) is not traded on Nasdaq, but halting trading on Microsoft and Oracle (which moved to the Big Board on June 20) may have an impact on IBM," Sal Amuk, equity trade and co-founder of Themis Trading, told the Washington Post.
While Nasdaq didn't provide a reason for the market mayhem, much to the chagrin of the trading community, professionals weighed in on what could have caused the hiccup…
- A hacker
- A fat finger (trader's typo)
- A high-frequency trading miscarry
- New software
- A combination of the above
Bottom line: a combo of technology and Wall Street's massive power…