By Denise Duclaux – Some traders talked sports and took smoking breaks, while others scrambled for the latest news on the software snafu that slammed the brakes on New York Stock Exchange trading early Friday.
A glitch in software the Big Board installed overnight triggered failures in trading on half of the NYSE floor at the opening. The problem eventually shut down the exchange -- which trades mammoth companies like consumer products group Procter & Gamble Co. and industrial conglomerate General Electric Co. -- for the first time in more than two years.
"It was a very big shock," said Ted Oberhaus, working out of New Jersey as manager of equity trading at Lord Abbett & Co., which oversees about $40 billion in assets.
Indeed, the Big Board prides itself on being a pillar of stability in the frenetic world of Wall Street. While other businesses closed down in the face of the East Coast blizzard of 1996, one of the biggest storms of the century, the NYSE simply curtailed its hours.
Trading was halted at 10:10 a.m. ET and reopened at 11:35 a.m. ET Friday, but problems continued into the afternoon. Before the NYSE stopped trading, the technical problems hit an unknown number of stocks. Trading at first failed to open in 10 of the 30 bellwether stocks that make up the Dow Jones Industrial average, spreading confusion across the NYSE floor.
"It stopped in a few posts first and then it went floor- wide, but even at that point in time, you still had customers wondering what was going on in the market, because the dissemination of news wasn't uniform," Eddie Matthews, a head trader at broker/dealer Schubert Group International, said from the NYSE floor.
During the surprise recess, some traders milled about the floor, discussing politics and sports. Some took advantage of the break to sneak outside for a smoke on a warm June day. Those not on the floor were dreaming of skipping out too.
"My general reaction is, if it closes for a little while, maybe I'll get to leave early and watch my son's baseball game," said John Forelli, a portfolio manager who works out of Boston at Independence Investment Associates, which has about $25 billion in assets.
But others were not so nonchalant about the glitch that sidelined billions of investor dollars.
"There was a fair amount of confusion and this environment with the way the economy has been I think it wreaked a little more havoc than it would have normally done," said Matthews, who scrambled to get the latest updates on the trading halt.
Conversation halted on the floor every time an announcement was made over the exchange's loudspeaker, which offered updates on when trading would resume. When the reopening bell sounded, cheers and applause rose from the floor.
Matthews believes the system failure helped set the stage for a dreary day on Wall Street.
"The belief that you are getting a natural market is going to take a while because (investors) don't really feel that committed to what people are saying right now," Matthews said.
Indeed, IBM, the world's largest computer maker and a Dow heavyweight, and other stocks remained halted after the New York Stock Exchange reopened later in the morning.
"When you deal with technology, these issues are going to come up. It's not unique to the NYSE," said Peter Coolidge, managing director of equity trading at Brean Murray & Co.
Earlier this week, the trading system of the Nasdaq, the NSYE's main rival, broke down for about 20 minutes, as the No. 2 U.S. equity market worked on increasing the system's capacity.