Investing 28 Feb 2007 05:02 pm

Computer Meltdown “Star” of Stock Market Plunge

by Sean Hackbarth

Bad stock market days happen. When you get runs like we’ve been watching these last few months we shouldn’t be surprised to witness a considerable drop like yesterday’s. Two groups who have egg on their faces are the NYSE (NYE) and Dow Jones (DJ). The stock exchange couldn’t handle the massive volume leaving many trades unprocessed. Today the NYSE asked specialist firms to remain open after the closing bell to finish processing trades. Tuesday wasn’t a shining moment for the now publicly-traded exchange.

For Dow Jones their credibility to communicate vital market data took a huge hit. Tuesday, Dow Jones’ computers couldn’t keep up with the massive volume. Their index calculations fell behind what was actually happening. When technicians switched to a backup system the data caught up causing a 178-point drop. That set into motion automatic computer trades linked to the Dow Jones index.

I expect trading houses to build their own DJIA calculators on their own computers so prevent this from happening again. That will cut into Dow Jones’ subscription revenue. I also expect a few trial lawyers to launch a few suits to recoup clients’ losses.

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One Response to “Computer Meltdown “Star” of Stock Market Plunge”

  1. on 01 Mar 2007 at 12:18 am 1.thinktank said …

    International Institute of Management (IIM) released a new report warning about the U.S. economic risks. The report:
    1. Uncovers the forces behind Feb 27th stock market meltdown and the Chinese reaction to the outlook of U.S. Economy.
    2. Forecasts the future behavior of U.S. and global markets.

    Med Yones, the author of the white paper, warns against costly policy mistakes and provides a detailed analysis of the economic, social and geopolitical risks facing the United States

    The complete text of the report is available at:

    http://www.iim-edu.org/u.s.economyrisks/

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