Technician's goof stalls Nasdaq
Associated Press
NEW YORK — Technical problems caused by a worker's error disrupted the Nasdaq Stock Market yesterday, delaying final prices and the compilation of Wall Street's major indexes.
The problems with two key trading systems forced the Nasdaq to extend its regular trading session by an hour to 5 p.m. EDT and cancel the late trading session it regularly holds.
Officials of the computerized stock market said an error by an Worldcom Inc. technician was to blame. They hoped to have both systems working by Monday.
"This was unrelated to system capacity" or other problems at the Nasdaq, spokesman Scott Peterson said. "Human beings make mistakes."
It was the second straight day of trading problems for the Nasdaq, but Peterson said the glitches were unrelated.
Although trading continued yesterday on alternative networks operated by other service providers, the problems with the SelectNet and Small Order Execution System, or SOES, made it difficult to buy and sell Nasdaq stocks.
The problems meant final numbers for the major stock market indexes, including the Dow Jones industrial average, the Nasdaq composite and the Standard & Poor's 500, could not be immediately compiled. Final stock prices were delayed.
On Thursday, the same systems were shut down after the quote service began malfunctioning. The disruptions were briefer, though, lasting about 20 minutes, and the regular session was not extended. Nasdaq officials do not know what had caused Thursday's problems.
The impact of yesterday's difficulties was hard to assess.
Although trading was expected to slow ahead of the July 4 holiday, yesterday also marked the end of the second fiscal quarter and the annual rebalancing of the Russell 2000 Index of small capitalization stocks.
Still, technology stocks advanced again yesterday, handing the Nasdaq composite index a five-session winning streak, as the market extended its celebration of Microsoft's appeals court win in its antitrust fight with the government.
On the last day of a dismal quarter, one that was marred by more than 600 profit warnings, analysts said the market is beginning to look ahead. With six interest rate cuts this year — the latest delivered Wednesday — investors believe that business could indeed turn around in the second half of 2001.
"We are seeing signs that the economy is stabilizing, and that is great news. And what we are seeing vis-a-vis Microsoft is that the current (presidential) administration is pro-business, and that's good," said Arthur Hogan, chief market analyst at Jefferies & Co. "That combination of news is going to spark a summer rally."
The weeklong tech rally owed itself to an improving outlook for the economy, analysts said. The fact that blue chips traded lower yesterday was also encouraging, because it could be a sign that investors were favoring battered tech shares over relatively safer stocks such as pharmaceuticals and financial companies.
The second quarter was especially rocky, marked by a big April-May rally and subsequent selloff as hundreds of companies issued profit warnings. Still, the major indexes each posted sizable quarterly gains. The Nasdaq spiked up the most, jumping 17.4 percent, or 320.28 points. The Dow advanced 6.3 percent, gaining 623.62 points. The S&P 500 rose 5.5 percent, or 64.05 points.
Throughout the quarter, investors were alternately skittish about earnings and the economy and hopeful that business will improve in the second half of the year. They were disappointed Wednesday by the Fed, which lowered interest rates by a quarter point, half the size many on Wall Street wanted.
But after thinking about the Fed's move, analysts said the market saw the smaller cut as a sign that the economy is improving.
"All the economic data over the last few weeks has been better than expected, and that shows a trend that things are getting better. ... The Fed didn't cut more because it doesn't have to — the economy is getting better." said Hogan, the Jefferies analyst.
Advancing issues outnumbered decliners nearly 2 to 1 on the New York Stock Exchange. Consolidated volume came to 1.69 billion shares, compared with 1.55 billion on Thursday.
The Russell 2000 index, which measures the performance of smaller company stocks, rose 9.65 to 512.64.
