In what could be attributed as the perfect storm to no one except Bill Cosby’s PR director, on Wednesday, the New York Stock Exchange, United Airlines and the Wall Street Journal’s website were slammed with technical glitches which downed all three.
While the U.S. spent the start to the post-holiday week consumed by news as unsurprising as the passing of time, namely Kourtney Kardashian kicking Lord Disick to the curb and Cosby being exposed as serving Quaaludes to women he intended to molest, China was quietly self imploding.
China’s stock market has lost 30 percent of its value in the past three weeks, with total losses standing at $3.73 trillion. As of last night, the panic selloff had resulted in 1544 companies, equivalent to 54.7 percent of the Shanghai Composite and Shenzhen Composite suspended, freezing $3.55 trillion.
Growing concerns across global markets come amid the Chinese government’s struggle to stem fears about the country’s stock markets from spreading, as it openly fought market forces by pledging to intervene via a larger role. Last week, the Bank of China cut short-term interest rates for the fourth time this year, the government suspended initial public offerings in an attempt to stem market bleeding and established a market stabilization fund to try and bolster its stock market.
On Tuesday, hacker group Anonymous tweeted a suspicious statement about potential problems on Wall Street.
Wonder if tomorrow is going to be bad for Wall Street…. we can only hope.
— Anonymous (@YourAnonNews) July 8, 2015
Though it all seemed to be a big LOL, the group adding to the confusion with this cryptic tweet on Tuesday afternoon.
Ok everyone… Regarding – – – LoL NYSE Wall Street LoL – – – https://t.co/xZaZFSkkH3
— Anonymous (@YourAnonNews) July 8, 2015
Trading in all symbols was halted on the NYSE around 11:30A.M. ET, which the exchange attributed to an ‘internal technical issue’ rather than a cyberattack, without providing any guidance for when floor trading would resume. NYSE President Thomas Farley later announced plans to reopen by between 2:45 and 3P.M., and that all orders, including market on lose, limit on close and closing outset, have been cancelled. The NYSE resumed trading just after 3:10P.M., after a 3.5 hour shutdown.
Stocks closed more than 1 percent lower on Wednesday as continued concerns about Greece and the extended selloff in the Chinese market weighed on investor sentiment, reflected in the tepid commentary in the Federal Open Market Committee (FOMC) minutes from the June meeting, released while trading was halted.
According to one theory doing the rounds, the halt might have been triggered by NYSE Rule 80B, an automatic level 3 circuit breaker, which is implemented following a 10, 20 or 30 percent decline in the Dow Jones Industrial Average in a single session, ceasing trading for the remainder of the day.
Trading on the NYSE floor amounts to about 25 percent of consolidated tape volume, or trading of all NYSE securities on all platforms, based on a recent 30-day average.
President Barack Obama was briefed on the issues mid-morning and along with the FBI, is said to be ‘monitoring the situation’ but ‘no further law enforcement action is needed at this time.’ Which is as reassuring as being on a plane when the pilot announces that ‘we’ve got not enough fuel to land but don’t be worried just yet’.
Unless it’s a United Airlines flight, because, if that were the case, you’d likely still be on the ground.
While U.S. officials have claimed the two are unrelated, speculation is mounting that the NYSE glitch and a technical issue grounding all United flights across the U.S. are connected. The WSJ’s website also suffered an outage early Wednesday, though it was resolved by approximately 1P.M. United flights have since resumed with a significant backlog.
Market watchers remain divided in the cause of the technical glitch trifecta, with theories ranging from European and Chinese stock and bond holders flooding U.S. market in desperate search for liquidity, while others said the issue might have been impacted by China having halted local institutional selling in the U.S.
With China’s upcoming GDP figure expected to show the slowest growth since before the financial crisis, there’s every chance the unfolding drama in the country could outdo Greece.
Analysts had doubted that the Bank of China’s decision to slash borrowing costs to stabilize a selloff in an overheated market would work even in the short term, instead fueling more alarm. In the longer term, making borrowing easier in response to a problem caused by debt-fueled speculation also seemed futile, with the panic selling continuing this week, quickly spreading across global markets.
While Kardashian aficionados can breathe a sigh of relief amid reports that Disick is already summoning his female fan base to toast his new single life at a pep rally in Vegas, Cosby’s fate is a little more like China’s. While he won’t face prosecution for most of the rape allegations against him due to them lying outside the statute of limitations, like the Chinese government, his lawyers are going to have to perform a lot of creative fancy footwork to get him out of the red on the civil front.
