NYSE, United Airlines and Wall Street Journal weather day of …
Wednesday was a rough day for tech: One of the nation’s biggest airlines, its oldest stock exchange and its most prominent business newspaper all suffered technology problems that upended service.
After the New York Stock Exchange halted trading, the seriousness of the disruptions led President Barack Obama into a briefing session with his homeland security adviser, Lisa Monaco, and Chief of Staff Denis McDonough.
“There’s no indication that malicious actors were involved in these technology issues,” White House press secretary Josh Earnest said.
Once the system is repaired, “we’ll take a longer look” at the economic impact, he said. It is likely that the Securities and Exchange Commission will investigate the NYSE’s disruption.
Wednesday’s events sparked an endless stream of jokes and conspiracy theories posted on Facebook and Twitter as well as the suspicions of FBI Director James Comey.
“In my business, you don’t love coincidences,” Comey told Congress on Wednesday. “But it does appear that there is not a cyber intrusion involved.”
First a “router issue” at United Airlines suspended all of the company’s flights for nearly two hours, leading to about 800 flight delays and about 60 cancellations.
Then at 10:32 a.m., a “technical problem” at the NYSE halted trading in part of its operations.
In the midst of that, the Wall Street Journal’s website, WSJ.com, had “technical difficulties” that sent readers to a temporary site while the paper worked to fix the problem.
“The problem is humans can’t keep up with all the technology they have created,” said Avivah Litan, an analyst at Gartner. “It’s becoming unmanageable by the human brain. Our best hope may be that computers eventually will become smart enough to maintain themselves.”
Technology makes life easier and the economy more efficient, allowing for nearly instantaneous flow of information and communication and for remote control of far-flung operations. Until it fails. And technology problems like Wednesday’s that temporarily knock out vital services and conveniences of modern life are likely to become more common as computers and other electronic devices increasingly connect over the Internet.
Wednesday’s disruptions didn’t help Wall Street’s outlook. U.S. stock indexes sank amid growing concerns that trouble in China’s markets could spread. The Dow Jones industrial average fell 261.49 points, or 1.47 percent, to 17,515.42.
For United, it was the second time in five weeks the airline had to ground flights because of a computer issue. On June 2, the airline had to halt all takeoffs in the United States because of what it described as computer automation issues.
Even though United restarted its operations at 9 a.m., its computer systems still suffered from lingering problems.
It proved a disruptive day for air travelers as a series of megamergers had concentrated roughly 80 percent of the nation’s air traffic among four carriers: American Airlines, United, Delta Air Lines and Southwest Airlines.
George Hoffer, a transportation economist at the University of Richmond, said the disruptions caused by United’s router problem were “a perfect example of where the megamergers added redundancy to the individual carrier, but really lessened redundancy for the airline system.”
“The concentration, as predicted, makes a greater percentage of the system at risk if a glitch occurs,” he added.
On Wall Street, the disruption at the NYSE stretched for 31/2 hours and was the longest in its history. That also was longer than the roughly three-hour disruption at the Nasdaq market in 2013 that halted trading not only on its own platform but also anywhere stocks that it listed changed hands.
“I think everyone needs to assume technology is going to go down sometimes, but you should be resilient enough to quickly recover from the outage within a half hour, if not a few minutes,” Litan said.
When the shutdown began, Peter Costa, a trader on the floor with Empire Executions, said exchange employees manually canceled about 700,000 orders that were in the system.
The initial issues hit only a small number of stocks, and the exchange appeared to have dealt with the problem, but they reappeared on a more widespread basis later in the morning, traders said.
Effects of the troubles in New York reached the Kansas City area.
Bats Global Markets, the Lenexa-based stock exchange operator, declared “self-help” to bypass the NYSE and operated normally throughout the day. It also picked up trading volume that normally would have headed to the Big Board. The Nasdaq market also avoided the NYSE’s problems and operated normally.
The NYSE’s disruption was limited to the operations of its trading floor and the American Stock Exchange operations that it had acquired years ago. These combined for about 13 percent of U.S. stock trading in recent days, according to market data posted online by Bats.
Technical problems left undisturbed the NYSE Arca electronic trading platform that had handled about 12 percent of U.S. stock trading in recent days. The NYSE had acquired the Archipelago electronic trading center in 2005 but kept it separate from its own electronic operations, said Jeffrey Wallis, a market structure expert.
Wallis said the market functioned through the disruption in part because of the “fragmentation” of the market, with rival exchanges capable of picking up the slack.
“A major market center has gone down, and yet the market from an economic perspective has continued on without any major impact to investors,” Wallis said.
Trading volume data from Bats showed the shift of activity away from the NYSE and toward the working markets.
Bats’ exchanges handled 23.9 percent of trading volume Wednesday, compared with about 20.3 percent in recent days. Nasdaq handled 20.7 percent, rather than 18.6 percent in recent days, the Bats data showed.
With its Arca electronic platform operating normally, the NYSE still captured 18.8 percent of trading, Bats’ data showed, though that was down substantially from about 24.9 percent in recent days.
The Star’s Mark Davis contributed to this report.
The persistent slide of China’s stocks has some fearing the effects will spread to the U.S. and other foreign markets. | A10
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NYSE, United Airlines and Wall Street Journal weather day of …
