Nasdaq cancels some Kraft stock trades Wednesday
BY DAVID ROEDER Business Reporter firstname.lastname@example.org October 3, 2012 11:30AM
Updated: November 5, 2012 11:31AM
There it goes again.
Wall Street had another glitch Wednesday, forcing cancellation of trades and reviving worries that markets moving at the speed of technology can veer out of control.
The latest problem involved shares of Kraft Foods Group Inc. two days after it began trading on its own after a spinoff. The shares rose 29 percent within a minute after trading opened at 8:30 a.m. Chicago time, to $58.54.
Exchanges including the Nasdaq and the New York Stock Exchange scrapped trades that occurred at or above $47.82 during that 60-second period, calling them “clearly erroneous.” For the rest of the session, trading in Kraft was normal and the shares closed down 55 cents, 1.2 percent, at $44.87.
On Aug. 1, an uncontrollable blitz of trades from Knight Capital Group Inc. cost the firm $440 million and nearly forced the market maker into liquidation. The market also in recent months has sustained high-profiled glitches in initial public offerings for Facebook Inc. and BATS Global Markets Inc.
Many traders believe the problems are caused by high-frequency trading and by firms that rely on algorithms to initiate orders.
“Investors don’t necessarily see that there are misdeeds going on, but they sense that things are out of control, said William Hummer, chief economist at Wayne Hummer Investments.
Hummer said lack of trust in the markets is a factor in more individual investors stepping away from stocks. “People see these glitches and they figure they’ll stay with bonds, metals, something else,” he said.
Kraft Foods saw its Nasdaq listing launch on Monday after the former Kraft split its business in two, the other being global snacks producer Mondelez International Inc.