NYSE shut down because of System Problems

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Today's system problems will be a hot topic of conversation in terms of its impact on individual trades and today's trading session in a broader sense. The markets opened relatively flat to start the day as investors were working through the divergence in Juniper's (JUNPR -17.5%) earnings warning and Intel's (INTC -2.4%) reiterated guidance. As the session wore on, a relatively flat session began to sell off slightly. As a consequence, both the Dow and the S&P 500 have taken a notable slide since the NYSE has reopened for trading. Of note, both the S&P indices and the Dow contain Nasdaq traded issues as component companies. The indices traded reasonably flat while the NYSE was halted. The Dow has now broken under 11,000 while the Nasdaq and the S&P 500 trade near the day's worst levels. XOI +0.2%, S&P Midcap 400 -0.8%, DJTA -0.6%, DJUA -0.1%, Nasdaq 100 -3.1%, SOX -3.0%, Russell 2000 -0.4%, NYSE Adv/Dec 849/1269, Nasdaq Adv/Dec 1210/2050

11:35AM: The NYSE has reopened for trading at 11:35 ET.

11:30AM: Still not open yet on the NYSE. The exchange just issued a "five minute warning" designed to give traders an opportunity to prepare for the "new session." Trading should open on the Big Board at approximately 11:35 ET. The Nasdaq has modestly extended its losses since the last update with the index trading near the day's worst levels. XOI +0.2%, S&P Midcap 400 -0.5%, DJTA -0.2%, DJUA +0.3%, Nasdaq 100 -3.0%, SOX -2.6%, Russell 2000 -0.3%, NYSE Adv/Dec 507/647, Nasdaq Adv/Dec 1233/1962

11:00AM: The Big Board is scheduled to reopen in 15 minutes assuming the software/system issues have been resolved by that time. With trading halted on the NYSE, volume has been notably lighter on the Nasdaq in addition to the regional exchanges and ECNs. Though activity on the Nasdaq has been somewhat limited, there are a few interesting technical developments worth noting. The index has broken under a support level in the area of 2240 to 2245 which is the trendline off the Nasdaq's January and May highs. Very near term support remains at 2205 which will be a level to watch if the today's slide should continue. On the upside, the index faces resistance around the previously mentioned 2240 area with additional resistance at 2250 to 2255. Put another way, there is a fair amount of congestion on the upside which the Nasdaq had managed to briefly penetrate late yesterday. With today's system issues on the NYSE and traditionally lighter volume on a Friday, it may be that today's session serves as a "consolidation day" for the Nasdaq. XOI +0.2%, S&P Midcap 400 -0.4%, DJTA -0.3%, DJUA +0.3%, Nasdaq 100 -2.5%, SOX -2.4%, Russell 2000 -0.2%, NYSE Adv/Dec 507/647, Nasdaq Adv/Dec 1169/1881

10:30AM: Well the NYSE is now closed for another 45 minutes. Posts 1 through 8 (there are 20 posts on the floor) never opened due to system problems which had prevented trade activity on roughly half of NYSE issues. Ten of the 30 Dow components never opened for trading -- ticker symbols are as follows: AXP, BA, DD, EK, IBM, MMM, MO, SBC, UTX, XOM. The Dow and S&P futures have halted at 10:30 ET -- they had remained open but will be shut down until the NYSE is back up. The exchange made the move shut down entirely for the sake of fairness. Not great to be prevented from trading while the market could potentially move away from investors. Of note, NYSE issues are still trading on regional exchanges and ECN's where there is limited liquidity. New software was installed last night and the change is being attributed for this morning's troubles. XOI +0.2%, S&P Midcap 400 -0.5%, DJTA -0.2%, DJUA +0.3%, Nasdaq 100 -2.6%, SOX -2.5%, Russell 2000 -0.3%, NYSE Adv/Dec 507/647, Nasdaq Adv/Dec 1090/1814

10:15AM: Hearing from traders that the NYSE has been halted. The market will reopen at 11:15 ET.

10:05AM: Still lower across the board though the markets have stemmed their slide at this point. The Big Board is having computer troubles which has prevented trading on several issues. The extent of the trouble is reflected in the lower than usual numbers on NYSE market breadth. Also, just over 40 million shares have traded on the NYSE which is unusually light at this point in the day. Energy related issues such as oil, oil service and natural gas continue to see buy interest in addition to advances in the insurance and health care sectors. The SOX continues to demonstrate weakness early on in the wake of mixed analyst comments on the group. Semiconductors have been a hot topic for debate among analysts who seem to chronically disagree over the timing of an upswing in the group's business cycle. XOI +0.4%, S&P Midcap 400 -0.4%, DJTA -0.2%, DJUA -0.1%, Nasdaq 100 -2.0%, SOX -1.8%, Russell 2000 -0.2%, NYSE Adv/Dec 486/616, Nasdaq Adv/Dec 1051/1599

9:45AM: The markets have opened lower across the board. Losses are manageable early on though the Nasdaq is taking the worst of this morning's sell pressure. Notably, the SOX is posting a modest loss of 0.8% in spite of yesterday's positive reaction to Intel's (INTC +0.8%) reiterated guidance. Networkers are lower in sympathy with Juniper (JNPR -13.8%) though the group isn't getting hammered the way it could be. Early on it looks like JNPR is being singled out. On the broader markets, oil and utilities are back in favor in the wake of relative technology weakness. Homebuilders are also experiencing modest buy interest. Sell pressure is evident in telecomm equipment, financials, health care and chemicals. Market internals look broadly weak and have deteriorated early on. Nasdaq internals are skewing notably bearish.

9:10AM: Not much change in the market tone since the last update. S&P futures at 1282, trade three points below fair value while Nasdaq 100 futures at 1979, trade seven points below fair value. The markets will be reacting to last night's guidance from Intel (INTC 31.14) in its mid-quarter conference call. The Dow component and technology bellwether reported that revenue, gross margins and expenses for the second quarter will be within previous guidance but slightly below the midpoint of the range provided on April 17. As a reference point, Intel's prior guidance included revenue in the $6.2 billion-$6.8 billion range, gross margins of approximately 49% and capital spending for 2001 of roughly $7.5 billion. In addition, Intel management said June is shaping up to be a "normal June" meaning it is consistent with business patterns over the last five years. Prudential Securities has upgraded the semiconductor sector this morning to Market Outperform from Market Perform. The firm is citing data points from its European Semiconductor Conference and Intel's positive view of this year's second half.

8:45AM: The markets are mixed in the pre-market on revised guidance from a few technology companies. S&P futures at 1288, trade one point above fair value while Nasdaq 100 futures at 1997, trade 11 points over fair value. Juniper Networks (JNPR 46.63) has surprised investors with an earnings warning for its current quarter. The networker now sees second quarter earnings in the range of 8 to 9 cents per share which is well short of current consensus estimates for $0.24 EPS. On the topline, JNPR projects revenues of $200-$210 million which is down from original guidance of $300-$330 million. The company's revised expectations are a result of a challenging service provider and global carrier business environment, brought about by a capacity absorption cycle taking place currently throughout the industry. The Juniper warning is indicative of the serious problems affecting the telecom carriers, but does not speak to the health of the enterprise market. Companies hardest hit will be those with the greatest exposure to carriers. Juniper's direct competitors are Cisco Systems (CSCO 21.82) and Avici Systems (AVCI 10.32), with CSCO's focus on the enterprise market and AVCI being completely carrier-focussed. Other telecom companies that are not direct competitors but that have substantial carrier exposure are Redback Networks and Ciena.

8:30AM: S&P futures at 1282, trade three points below fair value while Nasdaq 100 futures at 1979, trade seven points below fair value. Markets are now lower on the back of Juniper Networks' earnings warning.

8:00AM: S&P futures at 1288, trade one point above fair value while Nasdaq 100 futures at 1997, trade 11 points over fair value. Markets carry a positive bias on the heels of Intel's mid-quarter conference call.

7:50AM: This morning's fair value figures -- S&P 500 fair value: 1287; closed even with fair value. Nasdaq 100 fair value: 1986; closed 8 pts below fair value. Current indications: S&P 500 futures are +0.2, or 0.2 above fair value. Nasdaq 100 is +19, or 11 pts above fair value... Equity futures have given up a good portion of early gains in reaction to Juniper warning, but are maintaining positive leaning, with Intel to thank.

6:18AM: S&P futures trading at 1291.90, 4.9 points over fair value, Nasdaq 100 futures trading at 2015.50, 29.5 points over fair value. The 30-year bond is up 5 ticks at 5.716%. The dollar is firmer against both the yen and the euro.

6:17AM: FTSE +0.33%, DAX +1.24%: European shares higher with technology outperforming on the lack of any nasty surprises out of Intel. Investors seen moving out of defensive sectors such as healthcare, utilities, and food and drug, and into telecom and technology. Infineon, STMicroelectronics and ARM all attracting a good deal of attention. UK shares underperforming, but Labour landslide not seen as having much of a lasting impact. Lufthansa shares boosted by hopes of an end to the four-month old wage conflict with its pilots.

6:17AM: Nikkei +1.15%, Hang Seng 0.77%: Asian stocks higher after Intel said it will meet its second quarter sales target. Chipmakers boosted by Intel news as well as lingering enthusiasm surrounding recent comments from the Semiconductor Industry Association that the industry will rebound in the second half of the year. Nikkei up 1.15%, led by the likes of Kyocera, Advantest and Toshiba. Taiwan up 1.4% with TSM leading the way, while Korea gained 3.4% with Samsung Electronics outperforming. Talk of good institutional buying throughout the region.

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-- Kevin (ktross@mailcity.com), June 08, 2001

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06/08 11:43 NYSE Software Glitch Halts Trading for 85 Minutes (Update5) By David Wells and Stephen Cohen

New York, June 8 (Bloomberg) -- A failed software upgrade forced the New York Stock Exchange to halt trading for 85 minutes.

The shutdown was the first at the exchange since October 26, 1998, when a faulty electronic switch forced a 59-minute suspension. The software glitch affected trading in half of the exchange's 3,000 stocks, prompting the Big Board to stop all trading, a spokeswoman said.

``The fair thing to do is bring the entire market down,'' said NYSE Chairman Richard Grasso. `We had a software upgrade that corrupted half of our'' trading posts.

The halt at the world's largest exchange, which traded an average $43 billion a day in the past year, affected the calculation of major market indexes and trading at the American Stock Exchange and on futures and options exchanges.

A post is the floor location where a specialist oversees stock trading. Typically several stocks are traded at each post. Before the halt, trading posts one through eight weren't functioning, traders said.

The exchange shut down at 10:10 a.m. New York time and resumed trading at 11:35 a.m.

``This will make everything kind of grind to a halt,'' said Leo Smith, head of trading at Putnam Investments Inc., which manages $400 billion in Boston. Traders were leery of doing business in Nasdaq stocks without having information from Big Board stocks, Smith said.

Still, Wall Street brokerages said they continued to fill clients' buy and sell orders off the exchange.

``We're currently making markets the way we always do, just as if it's before the market opens,'' said John O'Donoghue, co- director of equity trading at Credit Suisse First Boston. ``The NYSE is the central marketplace, and it affects us to some degree, but we're trading like we always do.''

AMEX Affected

The American Stock Exchange halted trading of funds that tracks baskets of stocks, because the funds include NYSE-listed companies, said spokesman Robert Rendine. Without prices of Big Board stocks, the value of the funds can't be calculated.

The Chicago Board Options Exchange and the Chicago Board of Trade halted trading of options on NYSE stocks.

``This hasn't happened in a long time,'' said Dan Mathisson, director of risk program trading at Credit Suisse First Boston.

``The NYSE is always claiming it's the most reliable exchange,'' Mathisson said. ``For them to go down like this is embarrassing.''

Mathisson said the NYSE's rival, the Nasdaq Stock Market, had been plagued by regular technical snafus as volume surged in 1999 and 2000. Shutdowns and slowdowns on the electronic market today are more rare, he said.

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-- kevin (ktross@mailexcite.com), June 08, 2001.


06/08 1:57P (DJ) =DJ Partial List Of NYSE Stks Still Halted; To Open Gradually

NEW YORK (Dow Jones)--The following is a partial list of New York Stock Exchange stocks that appear to have continued systems-related problems and are not currently trading. As reported, the NYSE has said that two of its trading posts continue to have technical problems in the aftermath of Friday morning's exchange- wide trading halt. The continued problems affect roughly 10% of the exchange's stocks, according to the NYSE. These stocks are reopening gradually. The most prominent stock that had been affected was International Business Machines Corp. (IBM), which has since reopened for trading. This list was compiled through a Dow Jones Newswires review of trading data. Anheuser-Busch Cos. (BUD) World Wrestling Federation Entertainment Inc. (WWF) Allstate Corp. (ALL) Genentech Inc. (DNA) Dynergy Inc. (DYN) Bear Stearns Cos. (BSC) Becton Dickinson & Co. (BDX) Phelps Dodge Corp. (PD)

-- PHO (owennos@bigfoot.com), June 08, 2001.


---------------------------------------------------------------------- ---------- 06/08 2:38P (DJ) =DJ Island - NYSE Halt-2: Archipelago Traded During Halt Too

A spokeswoman for the Archipelago ECN said that NYSE-listed stocks were traded on Archipelago during Friday morning's trading halt on the Big Board. Volume was about normal, she said, with no unusual upsurge in volume because of the halt. -By Michael Rapoport, Dow Jones Newswires; 201 -938 -5976; michael.rapoport@dowjones.com (END) DOW JONES NEWS 06 -08 -01 02:38 PM

-- PHO (owennos@bigfoot.com), June 08, 2001.


Crossposting from http://catless.ncl.ac.uk/Risks/21.46.html, "Forum on Risks to the Public in Computers and Related Systems" 12 June 2001 digest:

Another NY Stock Exchange outage

"Peter G. Neumann"

Fri, 8 Jun 2001 19:21:22 PDT

A software upgrade glitch resulted in the New York Stock Exchange being unable to trade roughly half of its stocks in the morning of 8 Jun 2001. Consequently, the exchange was shut down entirely (on grounds of fairness) until 11:35 a.m. EDT.

The RISKS archives note a 41-minute shutdown on 24 Feb 1971 (when both primary and backup systems failed), a 24-minute outage on 22 Oct 1991 (due to a power dip), a one-hour outage on 18 Dec 1995 (also due to a botched software update), and a one-hour crash on 26 Oct 1998.

Uninterrupted service is clearly not easy to achieve. The Nasdaq exchange computer system also shut down last week for 20 minutes (while the staff was working to increase capacity), a case that has not previously been reported here.

-- Andre Weltman (aweltman@state.pa.us), June 13, 2001.


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