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In a general sense, U.S. stocks got off to a quiet start Wednesday ahead of the latest monetary policy statement from the Federal Reserve. Things got a bit more exciting for certain stocks though, as a surge in volume tossed around names like Goodyear Tire & Rubber, China Cord Blood and CoreLogic.
All three, along with several others, saw violent swings in the first hour of trading, and the latter pair were actually halted for moving more than 10% within a five-minute period.
The focus centered on Knight Capital Group, which reportedly told clients it was dealing with a technical issue. The trading firm said it was looking into the issue Wednesday morning, then acknowledged a technology issue in its market-making unit impacted 150 NYSE-listed stocks and confirmed that it told customers to route trades through other destinations. The review in ongoing, Knight said.
For many, the drastic moves will offer a fresh reminder of the impact technical glitches can have on the market. While Wednesday morning’s hangup clearly did not have the broad impact of the May 6, 2010 Flash Crash – the New York Stock Exchange said it is reviewing trades in 148 stocks, but the S&P 500 was little moved – it will unquestionably renew the debate over electronic trading and whether market participants have sacrificed safety or soundness for speed.
Among the stocks that appeared to be impacted Wednesday (all but Goodyear were halted):
- Goodyear, which jumped almost 10% from an $11.51 open to $12.60, before falling back to $11.60.
- China Cord Blood, which opened at $2.47, more than doubled to $6.20, was halted twice, then dove to $2.88.
- CoreLogic, also halted twice, plunged from its $23.04 open to $20.33, then rebounded to $22.93.
- Trinity Industries jumped from $28.32 to $32.84 then retreated to $28.82.
- Kronos Worldwide went from $17.02 to $20.14 and nearly round-tripped to $17.31.
- Molycorp opened at $17.50 before diving to a fresh 52-week low of $14.35, then recovered to $17.16.
Volume on the New York Stock Exchange, and in many of the names apparently affected, was well above what is typical, which would appear to indicate some type of glitch or error may be at fault. Not just small stocks were potentially affected. Among the 148 stocks NYSE was reviewing were big companies like Alcoa, Wells Fargo and AT&T. While trading in those names was choppy Wednesday morning, their volumes were not wildly out of the ordinary, though volume in Wells Fargo hit its daily average by noon.
Interestingly, Knight Capital is among the firm’s to have griped about the handling of Facebook’s initial public offering in May. Then, the firm said it lost $30-$35 million due to the botched debut on the Nasdaq, later ripping the stock exchange’s proposal to compensate broker-dealers.
Shares of Knight were bearing the brunt of the market's ire with whatever occurred Wednesday, dropping 18.7%.
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