We just finished having a couple of cocktails with some guys who work on the floor of the New York Stock Exchange. And when we said we had a couple we mean we had a couple while our trader friends downed the drinks as fast as the barkeep at Harry's would refresh them. In fact, after a couple of especially quickly downed rounds the bartender started looking at us cross-wise, and so we stepped out onto the cobble stones of Stone Street for a smoke and a break from the cocktails.
"Hitting them a bit hard tonight," we said.
A long puff of smoke drifted from between the still clenched teeth of Trader Chris (whose name has obviously been changed at his request).
"Not hard enough," he said. "I thought people around me were going to give up the ghost when the bottom dropped out at thre. I need a drink today more than any day that I can remember. Hell. I need more drinks today than any day I can remember."
We talked for a bit about something else. Anything else. Weather. Girls. The Staten Island ferry. Then he decided that he'd had enough of Harry's. Trader Chris tapped on the glass of Harry's to get the attention of some of his fellow traders still drowning their memories of the day at the bar. They looked up and he pointed down Stone Street.
We settled into a booth against the wall at a dark Irish bar called Ulysses. In a few minutes we were joined by some other traders. Word had already spread that the Dow Jones company was blaming some sort of computer glitch for the huge plunge in the Dow Jones Industrial Average right around three in the afternoon. In a matter of mere seconds the DJIA had dropped hundreds of points. It was now just about half an hour past five and the company responsible for publishing the average was spreading the word that the high volume of trades had fouled up the computers.
"The hybrid system shat a brick on the market," one of the traders at our table said. "What a great welcome for Needleman."
Presumably he meant Niederauer, the Goldman Sachs managing partner and famous proponent of electronic trading who was tapped to be an top executive at NYSE yesterday. His rumored antipathy to floor traders—he reportedly referred to them as "five guys named Vinny"—had obviously not won him many friends around this particular table at Ulysses.
One trader at the table was worried that somehow this would all get turned around against the floor traders. "They're going to say we fouled it up. Watch. It's never the suits or the computers. It's the guys in the jackets," he said, punctuating his sentence with a long draw from a pint glass full of gin and tonic. I smiled a bit. That phrase--"the suits"--sounded so punk-rock. Or would have if it wasn't coming from a guy who has made his living on Wall Street for years. There is something particularly funny about the sound of class warfare coming from the mouths of guys who make hundreds of thousands of dollars (at least) a year.
According to the consensus at the table, there are lots of trades that still have not cleared. This means that there were traders stuck at work even as we sat in the bar, trying to get confirmations on trades and clean up their books. We saw a look pass across the faces of the traders that we thought was disgust. But then it looked like something else. It looked more like holy terror. Working past five is tantamount to sacrilege for many traders. Today was the day the God of the Closing Bell died. And, perhaps more ominously, it could mean that some trades had gone into the system and wouldn't clear until tomorrow morning. Those trades would likely be sell-orders, meaning that tomorrow could begin with another enormous downturn.
The waitress came around and took our orders. Shots and pints—of beer for some, or liquor for others—all around. We drank ours down, listening as the talk circled and circled around what it was like to watch the market drop hundreds of points in a single tik. Every now and then the conversation drew away to topics more mundane or personal, and then quickly found itself pulled back to the market plunge. It felt like a ship that was sinking, and might have been pulling us all down with it.
We said our farewells and hurried back to the DealBreaker branch office on Wall Street to copy down what we had heard in our notebooks, file our afterhours copy and see what was on the wires about today's trading.
Here's the official line coming from Down Jones and NYSE, via the Associated Press:
Dow Jones & Co., the media company which manages the flagship index, said around 2 p.m - just two hours before the New York Stock Exchange was to close - it was discovered computers were not properly calculating trades. The company blamed the problem on the record volume at the NYSE, and switched to a backup computer.
The result was a massive swoon in the index that happened in the seconds it took Dow Jones to switch to its secondary computers.
"The market's extraordinary trading volume caused a delay in the Dow Jones data systems," said Dow Jones spokeswoman Sybille Reitz. "We decided to switch over to the backup system, and the result was a rapid catch-up in the published value of the Dow Jones industrial average."
Spokesmen for the NYSE Group Inc. and Nasdaq Stock Market Inc. could not immediately confirm if all closing share prices were valid. A spokesman for the Big Board said it experienced "intermittent delays and are currently assessing the situation." The Nasdaq said it was "confirming" the closing numbers.
The Dow plunged about 200 points in a matter of minutes, and dropped as much as 546 points - its worst decline in more than five years, and one that sent the blue chips into negative territory for the year.
The floor traders we spoke to are probably still in the bar as we put this story up on DealBreaker. We've got a bit more work to do around here. A few more calls to make and stories to post. We hope you don't stay too late, fellas. We hope you get a good night sleep. Tomorrow you may need it.
Swiftness of Dow Drop Due to Computers [Associated Press via Forbes.com]