Investing 28 Feb 2007 05:02 pm
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.