[Melissa Block:] The New York Stock Exchange, Dow Jones and many, many investors are still trying to figure out exactly what went wrong yesterday. It's become clear that there was a series of cascading computer glitches. These errors compounded each other and made it difficult for many people to make the trades they wanted to. NPR Adam Davidson has that story.
[Adam Davidson:] Officials at the New York Stock Exchange and the Dow Jones are being quite careful about what they will say and declined invitations to be recorded. Dow Jones acknowledged yesterday that there was a problem with their computers. Today, we learned that the stock exchange had its own separate computer problem that affected trading. Holly Stark was on the Market Performance Committee at the New York Stock Exchange.
[Ms. Holly Stark:] I'm not exactly sure precisely what happened. Sorry.
[Adam Davidson:] She does know that yesterday afternoon, after 3:00 p.m., in the busiest hour just before the close of trading, a major computer system at the New York Stock Exchange began slowing down so much that it became, in some cases, unusable. Trading on the floor came to a total halted point. People wanted to sell stocks, other investors wanted to buy, but the computer couldn't handle the trades. Pretty soon, investors went to a very old system: paper and pencils. Stark knows the computer failed, but she says the New York Stock Exchange has not explained why.
[Ms. Holly Stark:] They're still looking at what happened, trying to point to exactly what fell down.
[Adam Davidson:] So the reason they're not telling us is they don't know themselves yet.
[Ms. Holly Stark:] I'm sure if there was a very simple explanation, we would have heard about it.
[Adam Davidson:] Here's what we do know. Around 2:00 yesterday, the computer that calculates the Dow Jones Industrial Average stopped working, so investors all over the world thought the Dow Jones average was not changing. They kept seeing the same number on their screens. They didn't know that the Dow was slowly, steadily creeping downwards because the computer wasn't telling them that. Around an hour later, just before 3:00, Dow Jones switched to a backup computer which was working. In an instant, the backup computed the right number for the Dow. Rather than that slow, steady decline, it looked at traders and investors like the Dow had fallen 200 points in less than 60 seconds. People thought the market was in freefall. So suddenly investors all over the world were trying to buy or sell stocks, or just log on to the computer to find out what was going on. The New York Stock Exchange system was overwhelmed and pretty much collapsed.
[Mr. Abelardo Gonzalez:] Once I sat down in my desk and PR went you need to drop whatever you're doing and look at this, that's when realized how big of an issue it was.
[Adam Davidson:] Around the same time, Abelardo Gonzalez saw that lots of other computer systems were also experiencing problems. He works for Keystone, a sort of Consumer Reports monitoring online trading sites like E-Trade, Ameritrade and lots of others. Keystone has computers all over the country which automatically login to online trading sites and make trades to see how well the sites are doing. [POST-BROADCAST CORRECTION: The company Abelardo Gonzalez works for is called KEYNOTE.] And most of the time, all the online trading sites do pretty well. They execute a trade in 10 to 15 seconds, but not yesterday.
[Mr. Abelardo Gonzalez:] We saw some of our sites take upwards of a minute to execute the transaction.
[Adam Davidson:] A minute, of course, is an eternity on a day like yesterday. Gonzalez says, surely thousands of people lost hundreds of thousands of dollars because of those delays. Yesterday was by far the worst day of glitches in seven years, he says. And Gonzalez says the worst thing is that it's quite easy to imagine a much busier trading day. So how concerned should we be that the computers the financial markets depend on are not ready to handle a very big event?
[Mr. Abelardo Gonzalez:] Well, not panic, but it's definitely a wakeup call.
[Adam Davidson:] The New York Stock Exchange did issue a release, saying it's in the process of upgrading its computers. Adam Davidson, NPR News, New York.