On Wednesday, July 8th the NYSE halted trading for just under four hours. Since it coincided with some other computer snafus, including one which caused United Airlines to cancel some flight and delay others, rumors of computer hacking by foreign forces flew.
My source on the floor of the exchange – Art Cashin – characterized it as a “malfunction” which was detected early and trading was halted so that there would be no trading errors. The NYSE is sensitive to this since the “Flash Crash” of 2010 during which the exchange computers ran amok and sent orders to the wrong places. It resulted in a very brief period when suddenly Blue Chip stocks traded for pennies causing losses to investors and traders alike.
To prevent another occurrence of 2010 the NYSE put in safeguards and Cashin commented “While I would prefer not to go through it again, the safeguards clearly worked and mispricing and losses were averted.”
When the NYSE closed down, investors were able to trade stocks on 11 other exchanges including NASDAQ, proving that redundancy in the US markets prevents markets from seizing up.
Despite the glitch, the market yesterday was reacting primarily to the melt-down of an overheated Chinese market; a situation that the Chinese government was attempting to halt. As of trading this morning, that seems to have happened and the US markets are up about 1% as of 11:00 AM today.