United Airlines flights were temporarily halted nationwide this morning after the FAA said a computer glitch — something it called “automation issues” — forced planes to be grounded.
The FAA’s Air traffic Control System Command Center reported that planes have been grounded at all airports, although the system slowly returned back to normal.
United Airlines, which is based in Chicago, said, “We experienced a network connectivity issue this morning. We are working to resolve this and apologize to our customers for any inconvenience.
According to law enforcement officials and representatives from United, the problems were not the result of a hacking issue. The New York Stock Exchange is still halted as of this writing and no specific reason for the outage has been provided.
Department of Homeland Security officials have yet to speak on the matter, and it is not clear if the events have officially been tied together or if they are being treated as separate incidents.
It could be a coincidence, but should America ever come under a widespread cyber attack it might look just like what we are seeing this morning, with critical systems in a variety of industries being attack nearly simultaneously.
In 2013 outgoing Department of Homeland Security Secretary Janet Napolitano warned that a cyber attack on the United States is imminent and that a coordinated attack could leave Americans scrambling for supplies if hackers targeted transportation and commerce systems, both of which appear to be having problems this morning.
Though a cyber attack remains a distinct possibility with officials keeping it hush-hush so as to prevent widespread panic, another possibility is that an entity, whether foreign or domestic, is testing cyber-based weapons.
The Chinese government has now reached a new level of desperation to halt their stock market’s decline. They just announced that they are banning all major shareholders, corporate executives and directors from selling shares for a period of six months. This comes after the Chinese government banned its National Social Security Pension Fund from selling stocks two days ago, although they are allowed to buy them.
NIA has been tracking every Shanghai Stock Exchange IPO from January/February 2015. About half of them have been halted from trading, but of the 10 Shanghai IPOs from January/February that remain trading – they are now down an average of 62.46% from their 2015 peak. On average, they remain up 114.34% from their IPO prices. At their 2015 highs, they were up an average of 491.91%.
The total market capitalization of Chinese stocks is now down to $7.547 trillion from a June 12th peak of $11.479 trillion. China’s market cap/GDP ratio has declined from an “extremely overvalued” 109.72% to the current “overvalued” 71.85% vs. its long-term median of 47.48%.
Chinese equities have lost $3.932 trillion in market cap over the last 17 trading days – equal to the combined GDP of Germany, Greece, and Hong Kong. On the way up, it took 48 trading days for Chinese equities to gain $3.932 trillion in market cap. They are now crashing 2.82X faster than they gained.
NIA called the top of the Chinese stock market perfectly on June 12th, when NIA predicted a 66% decline for Chinese stocks – right at the peak of the bubble. At that time, the Shanghai’s margin debt over the trailing 12 month period had increased by a 2.63X larger percentage than the Shanghai’s market cap – causing the margin debt/market cap ratio to rise from 1.72% on June 12, 2014 to 3.53% on June 12, 2015.
Since then, Shanghai margin debt has been declining at roughly the same rate as the Shanghai’s market cap. The margin debt/market cap ratio remains at an artificially high 3.46% – nearly double its two year median of 1.78%.
The Shanghai Composite will not be at its bottom until the margin debt/market cap ratio returns to 1.78%. Look for the Shanghai to lose another 25%-35% of its value while its margin debt declines by another 50%-70%. Check out these shocking must see NIA charts of the crashing China stock market bubble: http://inflation.us/chinese-government-bans-selling-of-stocks/
Dow off more than 261 points at closing bell.
There was no interruption at the dozens of other U.S. stock exchanges Wednesday, including the Nasdaq, so investors were still able to buy and sell stocks easily.
The NYSE didn’t say what the problem was but described it as internal issue and not the result of a breach of its systems.
It was already a tough day in markets when the unexpected hit.
The New York Stock Exchange stopped trading late Wednesday morning because of technical trouble, though NYSE-listed shares continued to trade on other exchanges.
NYSE said on its official Twitter feed that it was an internal problem and not related to a breach of its systems. As of 2:51 p.m. Eastern time, nearly three and half hours after the outage started, trading had not yet resumed on the NYSE.
The Dow Jones industrial average and other indexes continued to move as orders to buy and sell stocks were sent to the Nasdaq and other platforms around the country.
The outage came as major indexes were heading lower. Concerns about China’s plunging stock market and a logjam in talks between Greece and its creditors weighed on the mood.
The Standard & Poor’s 500 was down 22 points, or 1.1 percent, to 2,059 as of 2:51 p.m. The Dow sank 258 points, or 1.5 percent, to 17,518, while the Nasdaq fell 89 points, or 1.8 percent, to 4,907.
The trading halt at the NYSE came on the same day United Continental had to temporarily ground its flights across the country because of computer problems. There was no indication the outages were related.
KEEPING CALM: Tom Caldwell, who runs an investment firm with stakes in several exchanges, says there are some 60 exchanges and trading venues that can take orders when one goes down, so investors shouldn’t get rattled.
“It’s disruptive, but not wildly disruptive,” said Caldwell, chairman of Caldwell Securities. “You have so many competing exchanges.”
WHITE HOUSE BRIEFED: White House spokesman Josh Earnest said President Obama was briefed by White House counterterrorism and homeland security adviser Lisa Monaco and chief of staff Denis McDonough.
Earnest said Obama was briefed on the United Airlines glitch that temporarily grounded its flights.
“There is no indication at this point either that there is malicious activity involved or that it was related to any of the other high profile technology issues that have cropped up today.”
EXPERT TAKE: James Angel, associate professor of finance at Georgetown University’s McDonough School of Business, said the exchange shutdown showed both the fragility and the resilience of the modern technological society.
“What surprises me is how infrequently these major outages occur,” he said. “From an investors’ perspective, if you hadn’t heard about the outage, you probably wouldn’t have noticed.”
Angel sat on the board of exchange company Direct Edge before it was acquired by a larger rival last year.
ANOTHER EXPERT TAKE: Rick Kaplan, with Houston’s Legacy Asset Management tells Eyewitness News the glitch, while poorly timed, is not long term concern for investors. He says only twenty percent of the NYSE trading happens on the floor. The rest of it is through third party electronic system trades. “Not only has this technology provided a backstop for soemthing like this that has happened,” he said, “but it has also created efficiencies and helped trading become a lot more efficient.”
WATCHING AND WAITING: Thomas Farley, president of the NSYE Group, which includes the New York Stock Exchange, told CNBC in an interview that the exchange was aiming to reopen before the close, which happens at 4 p.m. Eastern time.
SEC: Mary Jo White, the chair of the Securities and Exchange Commission, said: “We are in contact with NYSE and are closely monitoring the situation and trading in NYSE-listed stocks.”
OTHER SNAFUS: U.S. markets have experienced other technical problems in the past as more trading is handled by computers.
In May 2010, the Dow Jones industrial average plunged hundreds of points in minutes in an incident that later became known as the “flash crash.” In March 2012, BATS Global Markets, a Kansas company that offers stock trading services, canceled its own IPO after several technical snafus.
Two months later, a highly anticipated IPO of Facebook on the Nasdaq exchange was marred by a series of technical problems, rattling investors unsure if their orders to trade went through.
MARKET RESPONSE: Stock in the company that owns the New York Stock Exchange continued to trade. The IntercontinentalExchange Group, which owns NYSE Euronext, fell $3.58, or 1.7 percent, to $223.65. That compares with a drop of 1.1 percent for Standard and Poor’s 500 index. Nasdaq OMX Group, which runs the rival Nasdaq exchange, fell 80 cents, or 1.6 percent, to $48.04.
ANOTHER SNAFU: United Airlines temporarily grounded all its flights in the U.S. because of a problem with its computer system. It’s the second time in two months that the Chicago carrier has been hit by technical troubles. Shares in United Continental Holdings, the parent company, fell $1.32, or 2.4 percent, to $53.
CHINA: The Shanghai Composite sank 6 percent Wednesday, despite new attempts by China’s government to stop the selling. Hong Kong’s Hang Seng, a victim of the turmoil in mainland Chinese markets, also lost 6 percent. Beijing ordered state-owned companies to buy shares and promised more credit to finance trading. The Shanghai index has lost a third of its value in the last month, leaving it with gains of 70 percent over the past year.
GLOBAL CONCERNS: “I think it’s a combination of fears,” said Hank Smith, chief investment officer at Haverford Trust. “The fear that there won’t be a bailout for Greece combined with what’s going on in China.”
GREECE: Hopes for a resolution to Greece’s crisis rose after the country applied for a new three-year loan and said it would have a new proposal for creditors in coming days. The deeply indebted country needs a financial lifeline from its European lenders before its banks collapse, an event that could push Greece out of the currency union.
REPORT CARDS DUE: The unofficial start to the second-quarter earnings season starts Wednesday when Alcoa turns in its results after the closing bell. Analysts forecast that companies in the S&P 500 will report that their overall earnings dropped 4 percent in the quarter, according to S&P Capital IQ, as a rising dollar and falling oil prices pinched profits.
EUROPE: Germany’s DAX gained 0.7 percent and France’s CAC 40 rose 0.8 percent. Britain’s FTSE 100 added 0.9 percent.
ASIA’S DAY: Japan’s Nikkei 225 fell 3 percent, and South Korea’s Kospi lost 1.2 percent. Australia’s S&P/ASX 200 shed 2 percent.
CRUDE: Benchmark U.S. crude fell $1.16 to $51.16 a barrel on the New York Mercantile Exchange. Brent crude was off 48 cents at $56.38 a barrel in London.
METALS: Gold rose $10.90 to $1,163.50 an ounce, and silver added 20 cents to $15.15 an ounce. Copper gained 5 cents to $2.50.
BONDS AND CURRENCIES: U.S. government bond prices edged up, nudging the yield on the 10-year Treasury down to 2.24 percent. The euro rose to $1.1083, while the dollar fell to 120.78 yen.