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Someone has a major, major problem on their hands': Panic on Wall Street as computer glitch sparks 'out of control' surge in trading
Associated Press, Reuters Reporter and Daily Mail Reporter
A technical glitch at a major Wall Street brokerage of stock trades caused wild swings in a number of stocks shortly after markets opened.
The malfunction occurred at Knight Capital, one of the largest processors of stock trades.
The company said in a statement that a 'technology issue' had occurred in its market-making unit related to the routing of shares of about 150 stocks to the New York Stock Exchange.
![Trading: Knight Capital, whose kiosk at the New York Stock Exchange is pictured here, is one of the largest processors of stock trades](/resources/uploads/images/trading knight.jpg)
Trading: Knight Capital, whose kiosk at the New York Stock Exchange is pictured here, is one of the largest processors of stock trades
Joe Saluzzi, co-head of trading at Themis Trading told FoxBusiness.com: 'The [algorithms] went nuts this morning. Someone has a major, major problem on their hands.'
CNBC reported that such algorithms are developed by major brokerages that buy and sell stock in accordance with formulas and market situations.
Not everyone agrees with the practice.
Phil Silverman, managing partner at Kingsview Capital, told CNBC: 'This algorithmic trading is kind of out of control. It seriously hurts investor confidence.'
![The trouble with trades: One trader called the computer glitch a 'major, major problem'](/resources/uploads/images/the trouble.jpg)
The trouble with trades: One trader called the computer glitch a 'major, major problem'
Knight told its clients to send their orders away from its system and that it was reviewing the issue.
Knight’s stock tumbled 32.8 per cent to $6.94, a nine-year closing low.
'All the brokers were on it within seconds, recognizing this was not normal behaviour in most of these stocks,' said Doreen Mogavero, chief executive at Mogavero, Lee & Co, who trades on the floor of the NYSE.
The stock exchange, as well as the Securities and Exchange Commission, is investigating the matter.
The technical problem arose as the Federal Reserve offered no new measures to stimulate the economy.
![Volatility: The 'technology issue' had occurred in its market-making unit related to the routing of shares of about 150 stocks to the exchange](/resources/uploads/images/volatility.jpg)
Volatility: The 'technology issue' had occurred in its market-making unit related to the routing of shares of about 150 stocks to the exchange
Officials at the Fed described the U.S. economy as having 'decelerated somewhat,' a change of tone from its June statement that it was 'expanding moderately.'
But the U.S. central bank stopped short of offering new monetary stimulus.
The Knight mishap was the latest in a series of high-profile mishaps that have damaged investor confidence in stock markets.
Wall Street opened higher after data showed U.S. companies hired more workers than expected in July, but continued weakness in the manufacturing sector pointed to sluggish economic growth.
Volume was above average with 7.26 billion shares changing hands on the NYSE, NYSE Mkt and Nasdaq, above the year-to-date daily average of 6.74 billion.
At the end of the day, the Dow Jones industrial average fell 32.55 points, or 0.25 per cent, at 12,976.13. The S&P 500 Index slipped 4.00 points, or 0.29 per cent, at 1,375.32.
The Nasdaq Composite lost 19.31 points, or 0.66 per cent, at 2,920.21.