Dow Jones' primary IT systems staggered by market plunge
The bars of Lower Manhattan are sure to be filled with stunned traders Tuesday, soaking up the effects of a 400-point, or 3 percent, drop in the Dow Jones Industrial Average. But their colleagues in IT might be working overtime after reports that a computer glitch made the situation appear even worse.
The Associated Press and The Wall Street Journal (paid subscription required) are reporting that the computer systems used by Dow Jones, the company that tracks the 30 stocks that make up the popular market metric, could not keep up with the flood of trades during most of Monday. When the index switched to a backup system around 3 p.m. ET, a backlog of orders was suddenly processed and the index fell more than 200 points in about a minute--from about 12,350 points to a little more than 12,100 points. About 40 million trades were processed in that span, according to technical charts, out of 387 million trades on the day.
Stock market analysts quoted in the reports said that the bottom of that fall accurately reflected the position of the market at the time. But the drop should have occured more gradually over the course of the day, rather than plunging so rapidly in such a short period of time, they said. Stocks immediately began to recover, but wound up finishing the day at 12,216 points.
The Nasdaq and S&P 500 were also off by almost 4 percent for the day, and suffered similar but shallower plunges at the same time, suggesting that investors might have been startled by the sudden plunge in the Dow Jones average.
Wall Street is a favorite destination for technology executives. Financial firms are willing to pay top dollar for whatever hardware and software is determined to be the latest and greatest. The reports did not identify the type of systems used by Dow Jones to calculate the price of the average.
