US stocks closed with sizeable losses after a technical outage forced the New York Stock Exchange (NYSE) to halt trading for half the day.
The exchange, in a statement late yesterday, attributed the malfunction to a “configuration issue” and not as the result of hackers.
It was already a tough day in the market when the NYSE halted trading because of technical trouble.
Yesterday morning’s outage came as traders had plenty of other things to worry about.
(1 of 3) The issue we are experiencing is an internal technical issue and is not the result of a cyber breach.
— NYSE 🏛 (@NYSE) July 8, 2015
Concerns about China’s plunging stock market and a logjam in talks between Greece and its creditors weighed on the mood.
Major indexes were already falling before the shutdown, which occurred shortly after 11.30am local time. NYSE resumed trading at 3.10pm.
The broader stock market stayed open as orders to buy and sell kept flowing to the Nasdaq and other exchanges around the country.
Tom Caldwell, who runs an investment firm with stakes in several exchanges, said there are some 60 exchanges and trading venues that can take orders when one goes down, so investors shouldn’t get rattled.
“It’s disruptive, but not wildly disruptive,” said Mr Caldwell, chairman of Caldwell Securities.
US president Barack Obama was briefed on the NYSE situation, according to Josh Earnest, the White House spokesman. Officials told the president there were no malicious actors involved.
By the end of the day, the Standard & Poor’s 500 index fell 34.66 points, or 1.7%, to close at 2,046.68.
The Dow Jones industrial average dipped 261.49 points, or 1.5%, to 17,515.42 and the Nasdaq slid 87.70 points, or 1.8%, to 4,909.76.
US markets have been dogged by technical problems over recent years as more trading is handled by computers.
In May 2010, the Dow plunged hundreds of points in minutes in an incident that later became known as the “flash crash”. In March 2012, BATS Global Markets, a Kansas company that offers stock trading services, cancelled its own IPO after several snafus.
Two months later, a highly-anticipated IPO of Facebook on the Nasdaq exchange was marred by a series of technical problems, rattling investors unsure if their orders went through.
James Angel, an associate professor of finance at Georgetown University’s McDonough School of Business, said NYSE’s shutdown highlighted both the fragility and the resilience of modern technology. Mr Angel sat on the board of exchange company Direct Edge before it was acquired by a larger rival last year.
“From an investors’ perspective, if you hadn’t heard about the outage, you probably wouldn’t have noticed,” Mr Angel said.
Portfolio manager Mark Spellman, of Alpine Funds, said an outage similar to yesterday’s would have caused panic a few decades ago, when the NYSE dominated the market.
But firms making trades were able to use a variety of other exchanges while the NYSE was out of commission. He says the disruption did not cause any problems for the global markets.
“Only 15 to 20% of global stock exchange trading happens on the NYSE these days,” he said. “Things are so spread out.”
Still, others on Wall Street found the long outage unsettling.
Phil Orlando, chief equity strategist at Federated Investors, said it was unsettling that computer problems also forced United Airlines to temporarily ground its flights across the country and the Wall Street Journal’s website went down, all on the same day.
“These are visible icons of American industry,” he said. “It’s just unnerving.”
Todd Leone, a trader with Meridian Equity Partners, said in an interview outside the NYSE that occasional technical glitches are a “fact of life” today.
“It’s a little bit scary,” Mr Leone said, speaking during the NYSE outage. “Computers dominate our lives.”
In China, the Shanghai Composite sank 6% despite new attempts by China’s government to stop the selling. Hong Kong’s Hang Seng, a victim of the turmoil in mainland Chinese markets, also lost 6%.
Beijing ordered state-owned companies to buy shares and promised more credit to finance trading.
The Shanghai index has lost almost a third of its value in the last month. It is still up 70% over the past year.
In Europe, Greece applied for a new three-year loan and said it would have a new proposal for creditors in coming days.
The deeply indebted country needs a financial lifeline from its European lenders before its banks collapse, an event that could push Greece out of the currency union.