Nasdaq Composite Surged After Now-Canceled Trades
By Lynn Thomasson and Nick Baker
March 23 (Bloomberg) -- The Nasdaq Composite Index twice jumped more than 7 points in a few seconds today because now- canceled trades in shares of Donegal Group Inc. sent the stock surging more than 11,000 percent.
As Donegal rose to $1,999 at 1:56 p.m. in New York, the Nasdaq Composite rose to 2457 from 2449.81. Eighty-five minutes later, the gauge tumbled 7 points. Even though the Donegal trades were erased, the index again surged more than 7 points at 4 p.m. Nasdaq removed that increase at 5:04 p.m.
``I'm not very happy about it,'' said Thomas Garcia, head of trading at Thornburg Investment Management, which oversees about $34 billion in Santa Fe, New Mexico. ``You're sitting there going, `What just happened? What's the news?' You almost stop trading because you want to know what's going on before you trade on it.''
When the market closed at 4 p.m., the Nasdaq Composite showed a 4.44-point gain for the day. The final adjustment more than an hour later left the index down 2.81 points, at 2448.93.
Bethany Sherman, a spokeswoman for Nasdaq Stock Market Inc., said even though the trades for Donegal's Class B shares at $1,999 were canceled, that price was factored into the Nasdaq Composite's initial closing level. The index finished the day at 2448.93.
Shares of Donegal are infrequently traded, with an average of 1,300 shares changing hands daily, according to Bloomberg data. The Marietta, Pennsylvania-based insurance company has market value of $455 million. The Class B shares finished with a gain of 55 cents to $18.05 in Nasdaq composite trading.
`It's Disturbing'
When U.S. stocks last month suffered the biggest rout since 2003, the Dow Jones Industrial Average plummeting 178 points in one minute. Dow Jones & Co. said its computers were responsible for the sudden nosedive in the 30-stock benchmark because they failed to keep up with trades. The New York Stock Exchange also had ``intermittent delays'' in prices, and Nasdaq reported slower distribution of some market data.
``It's disturbing,'' said Barry Ritholtz, chief market strategist at Ritholtz Research & Analytics in New York. ``Two of these in a month, it's not exactly encouraging. These are things that shouldn't happen.''
To contact the reporters on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net ; Nick Baker in New York at nbaker7@bloomberg.net .
Last Updated: March 23, 2007 18:54 EDT |
