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HUMAN ERROR linked to the New York Stock Exchange’s ‘disaster recovery configuration’ caused price swings

The New York Stock Exchange (NYSE) has revealed the reason behind a dramatic fall in corporate stock prices this week – revealing that the “root cause” was a “manual error” made by an individual.

The revelation, broadcast by the exchange on Wednesday, comes after dozens of stocks were halted at the start of trading Tuesday over what some said was a technical glitch.

The complication caused 87 stocks — including those of famous blue-chip firms such as Morgan Stanley, Wells Fargo and Exxon Mobil — fall and rise suddenly at the pre-issue opening bell was resolved.

The issue sparked chaos on the NYSE as traders were alarmed by the sudden drops – and in some cases increases – and wondered what might be causing the “flash crash” that interrupted the market’s opening as several typically reliable stocks in value decreased.

The New York Stock Exchange (NYSE) has revealed a reason behind the dramatic drop in corporate stock prices Tuesday, sending traders into panic before the issue was resolved

The complication caused 87 stocks — including those of famous blue-chip firms like Morgan Stanley — to suddenly collapse on the opening bell before the problem was resolved

The complication caused 87 stocks — including those of famous blue-chip firms like Morgan Stanley — to suddenly collapse on the opening bell before the problem was resolved

The complication caused 87 stocks — including those of famous blue-chip firms like Morgan Stanley — to suddenly collapse on the opening bell before the problem was resolved

Officials report this on the stock exchange on Wednesday morning shed some light on what happened, revealing it was related to the company’s “disaster recovery setup” before market opening.

“The root cause was a manual error related to the exchange’s Disaster Recovery configuration at the start of the day,” the exchange said, citing the complex system that assigns stocks an opening price at 9:30 a.m.

The exchange said a manual test of this system — which uses the thousands of orders collected overnight and in the morning to hand out stock quotes — somehow went awry on Tuesday.

NYSE officials opted not to elaborate on the exact nature of the problem, insisting on Wednesday that the exchange systems are now “operational” and that “a normal opening” is expected for the day.

In a statement Wednesday – about 24 hours after the unrest – the exchange says the “root cause” of the incident is a “manual error” that occurred prior to the market opening.

When the NYSE opens at 9:30 a.m., stocks usually get an “opening price.” To achieve this, exchange officials compile expansive lists of buy and sell orders and synthesize a single price to be offered at market opening. This practice fell flat on Tuesday, officials said

As the end of the day approaches, the exchange has so far proved correct in their promise – with trading largely resuming normal.

Typically, stocks open for trading on the NYSE at 9:30 a.m., after which a stock is given an “opening price.”

To achieve this, exchange officials compile expansive lists of buy and sell orders and synthesize a single price to be offered at market opening.

Wells Fargo saw its stock drop 5 percent Tuesday morning before returning to normal

Wells Fargo saw its stock drop 5 percent Tuesday morning before returning to normal

Wells Fargo saw its stock drop 5 percent Tuesday morning before returning to normal

McDonald's also saw a plunge, with its stock holding lower than when it closed on Wednesday

McDonald's also saw a plunge, with its stock holding lower than when it closed on Wednesday

McDonald’s also saw a plunge, with its stock holding lower than when it closed on Wednesday

Verizon saw a whiplash as the stock opened 7 percent higher before falling 8 percent

Verizon saw a whiplash as the stock opened 7 percent higher before falling 8 percent

Verizon saw a whiplash as the stock opened 7 percent higher before falling 8 percent

Intended to balance supply and demand and reduce volatility, the practice appeared to be falling flat on Tuesday, with stock market officials initially saying this pricing process “didn’t happen” for several stocks that day.

Following Wednesday’s statement, it can be assumed that a manual test of the system – which is performed by human employees – somehow went awry.

That caused shares of famous stable stocks like McDonald’s and Walmart to plummet, while others like Verizon rose suddenly by 7 percent, before immediately falling back by 8 during the short trading lull, which ended just before 10 a.m.

In total, more than 1,300 trades and 87 stocks were affected by the error, which has now been confirmed to be due to human error.

In total, more than 1,300 trades and 87 stocks were affected by the error, which has now been confirmed to be due to human error

In total, more than 1,300 trades and 87 stocks were affected by the error, which has now been confirmed to be due to human error

In total, more than 1,300 trades and 87 stocks were affected by the error, which has now been confirmed to be due to human error

The exchange has since identified 4,341 trades that they said should be cancelled. The Securities and Exchange Commission (SEC), which was created after the infamous Wall Street Crash of 1929 that triggered the Great Depression, has said it is investigating the matter.

On Tuesday, Ed Moya, a senior market analyst at Oanda, a leading online trading broker, commented on the turmoil caused by the outage as traders were left confused by the sudden rises and falls in what are usually considered reliable stocks.

Speaking to Bloomberg, Moya commented on the magnitude of the price swings and the impact they could have had on the economy if they had been real and not made by mistake.

The Securities and Exchange Commission (SEC), which was created after the infamous Wall Street Crash of 1929 that sparked the Great Depression, said it is investigating the matter

The Securities and Exchange Commission (SEC), which was created after the infamous Wall Street Crash of 1929 that sparked the Great Depression, said it is investigating the matter

The Securities and Exchange Commission (SEC), which was created after the infamous Wall Street Crash of 1929 that sparked the Great Depression, said it is investigating the matter

“These are not typical meme stocks, easily manipulated companies,” the trading expert said. “These are Morgan Stanley, Verizon, AT&T. These are some of the giants.’

Tuesday’s incident was the latest example of a “flash crash,” where stocks suddenly become volatile in the market due to a mistake.

One such flash crash occurred last year when a Citigroup trader made a mistake in the European market, causing stock indices to plummet before stalling.

Perhaps the most famous crash occurred in 2010, when a $1 trillion stock market crash hit Wall Street, caused by Navinder Singh Sarao.

Tuesday's incident was the latest example of a 'flash crash', where stocks suddenly become volatile in the market due to a mistake

Tuesday's incident was the latest example of a 'flash crash', where stocks suddenly become volatile in the market due to a mistake

Tuesday’s incident was the latest example of a ‘flash crash’, where stocks suddenly become volatile in the market due to a mistake

Sarao was sentenced to a year of house arrest in 2020 and pleaded guilty to wire fraud and market “spoofing” – placing large orders to manipulate prices before quickly canceling them.

U.S. authorities say he sent a shock of fear through the market that contributed to a sudden fall in stock prices on May 6, 2010, briefly wiping nearly $1 trillion off companies’ value.

All exchange systems are now operational, the exchange said Wednesday, and no further turmoil is expected, the NYSE said Wednesday.

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