May 19, 2024

Dow Reaches Record High, Spurred by Fed and Profits

The Dow Jones industrial average, which measures the performance of 30 blue-chip companies, rose more than 150 points in afternoon trading on Tuesday, surpassing its previous record close of 14,164.53, which it achieved nearly five and a half years ago, as well as its record intraday high, set around the same time, of 14,198.10.

Of course, a few things have happened since October 2007. The housing market collapsed, the financial system went into meltdown, the European Union started to fray and politicians dragged the United States through an on-off-on-again fiscal imbroglio.

 But stocks managed to move beyond all that.

 Since a low point in March 2009, the Dow Jones index has more than doubled, stunning even the most seasoned stock market watchers.

 “What’s amazing about this bull market is that people still don’t think it’s real,” said Richard Bernstein, chief executive of Richard Bernstein Advisors, a money management firm. “We think this could be the biggest bull market of our careers.”

On Tuesday in particular, leading indexes abroad were rising after the Chinese government announced that it would step up spending and European data showed that retail sales there have been stronger than expected.

After the bell sounded at the New York Stock Exchange, stocks were pushed up more after a reading on the service sector in the United States showed that it had risen to its highest level of activity in a year, surprising analysts.

“Given that the service sector accounts for close to 85 percent of the U.S. economy, the strong performance on this index suggests that the overall recovery may be continuing to build on the positive momentum at the end of the year,” said Millan Mulraine,  a senior strategist at TD Securities. There are some important caveats to the record, however. The Dow is a rather narrow measure of the stock market, so it can provide a somewhat distorted picture of the market’s performance.

At 1,541.81 points in Tuesday afternoon trading, the much broader Standard Poor’s 500-stock index was still off its nominal high of 1,565.15, also set in October 2007.

After taking inflation into account, both indexes are down from their earlier highs in 2000. And, on an inflation-adjusted basis, the S.P. 500 is down even after factoring in returns from dividend payments.

Still, American stocks are far ahead of their foreign counterparts. The Euro Stoxx 50, a barometer of euro zone blue chips, ended Tuesday at 2,683.02 points, off its record high of 5,464.43 reached in March 2000, while the FTSE 100 in London was at 6,431.95, compared to a record of 6,930.20 in December 1999.

In Asia, the Nikkei 225-share index in Tokyo closed Tuesday at 11,683.45; it reached its high of 38,916 points in December 1989. And the Hang Seng index in Hong Kong finished at 22,560.50, versus a high of 31,638 points in October 2007.

Still, despite its flaws, the Dow Jones average is the recognizable face of the stock market to many Americans, and it contains some of the best-known American corporations, like Wal-Mart, Coca-Cola, General Electric and International Business Machines.

The stock prices of some of the companies in the index have more than doubled since that low point in 2009. For instance, American Express is up more than 400 percent. After the crash of 1929, it took 25 years for the Dow to get back to the nominal level it plunged from. The severe economic contractions of the 1930s, during which scores of banks collapsed, weighed heavily on stocks.

But one essential government institution did things differently after the 2009 low point, and that has bolstered the stock market. The Federal Reserve has added more than $3 trillion of monetary stimulus to the economy and more than $1 trillion of bailout loans to financial firms since the 2008 financial crisis. This was done to prevent a widespread banking crash and help the wider economy.

Anne Bagamery contributed reporting from Paris.

Article source: http://www.nytimes.com/2013/03/06/business/daily-stock-market-activity.html?partner=rss&emc=rss

Markets Slide on Anxiety Over Fed

The minutes from the Fed’s January meeting showed that many officials voiced concern over the potential costs of more asset purchases, suggesting that a bond-buying program known as quantitative easing, or Q.E., could slow before a pickup in hiring that it was intended to deliver.

The volatility index on the Chicago Board Options Exchange, or the VIX, a measure of investor fear, jumped 19.3 percent, the biggest daily gain for the VIX since November 2011. Wednesday’s slide was a return of nervousness to markets after their solid march higher this year.

“What Wall Street wants to hear is an absolute sign that the Fed will continue with Q.E. for the indefinite future. When it says we may end it faster, that just raises the uncertainty, and the market hates that,” said Todd M. Schoenberger, managing partner at LandColt Capital in New York.

In a sign of broad market weakness, the number of declining stocks outnumbered advancers by a ratio of more than 3 to 1 on both the New York Stock Exchange and the Nasdaq. The volume of traded shares hit its second-highest level this year.

Prominent stocks in a range of sectors including the homebuilder Toll Brothers, the fertilizer maker CF Industries and the oil and gas producer Devon Energy, booked sharp losses after disappointing earnings and outlooks.

A slide in the commodity sector also weighed on stocks. Spot gold dropped to the lowest level since July. Benchmark industrial metal copper fell to a one-month low, and crude oil futures in the United States shed more than $2 a barrel.

The Dow Jones industrial average dropped 108.13 points, or 0.77 percent, to 13,927.54 at the close. The Standard Poor’s 500-stock index fell 18.99 points, or 1.24 percent, to 1,511.95. The Nasdaq Composite Index lost 49.19 points, or 1.53 percent, to end at 3,164.41.

For the benchmark S. P. 500-stock index, the day’s decline was the largest since Nov. 14.

The Fed has used the bond purchasing program since 2008 to stimulate the economy. The policy, which involves expanding the Fed’s balance sheet to buy bonds, has been credited with pushing money into the stock market. How an end of easing would affect markets is not known.

Still, the S. P. 500 has risen about 6 percent this year. Many analysts have been expecting the market to ease after the Dow and the S. P. came close to highs.

Energy companies’ shares were among the weakest on Wednesday, hurt by disappointing results in the sector and a 2 percent drop in crude oil prices. The Energy Select Sector SPDR, an exchange-traded fund, fell 2.1 percent.

Newfield Exploration fell 9.3 percent to $24.75 while Devon Energy dropped 6.6 percent to $56.57. Both companies posted fourth-quarter losses, with Devon hurt as it wrote down the value by $896 million because of weak natural gas prices.

Early Wednesday, unconfirmed rumors that a troubled hedge fund was selling assets added some downward pressure to the market. The rumors appeared to be unfounded.

“I heard the chatter about a hedge fund liquidating things today but how big, I don’t know. Certainly, it sparks concern,” said Michael James, senior trader at Wedbush Morgan in Los Angeles.

Housing shares also declined, pressured by weaker-than-expected results at Toll Brothers and a drop in groundbreaking to build homes, also known as housing starts, in January.

Toll Brothers’ stock fell 9.1 percent to $33.56, but is up about 4 percent this year, building on a jump of nearly 60 percent in 2012. The Dow Jones U.S. Home Construction index lost 6.7 percent.

“Valuations appear a bit high at these levels, and if I was in a name that had seen a huge run, I’d want to take some chips off the table,” said Matthew D. McCormick, money manager at Bahl Gaynor in Cincinnati.

Shares of OfficeMax fell 7 percent to $12.09 while Office Depot slid 16.7 percent to $4.18 as the companies announced a $1.2 billion merger agreement. The shares had surged in Tuesday’s session after a source said a deal would be announced.

A rival, Staples, fell 7.2 percent to $13.60 and ranked as one of the S. P.’s biggest decliners.

Interest rates were lower. The Treasury’s benchmark 10-year note rose 5/32, to 9929/32, and the yield fell to 2.01 percent from 2.03 percent late Tuesday.

Article source: http://www.nytimes.com/2013/02/21/business/daily-stock-market-activity.html?partner=rss&emc=rss

DealBook: Russia’s Main Stock Exchange Begins Trading

MOSCOW — Russia’s main stock exchange has garnered enough investor interest for an initial public offering, another milestone in the country’s capitalist evolution.

The Moscow Exchange, better known by its original name, Micex, for the Moscow Interbank Currency Exchange, is scheduled to begin trading Friday in Moscow on its own trading platform.

The stock will price near the bottom of the expected range, valuing the company at slightly more than $4 billion, a financial industry official briefed on the plan said Thursday evening.

The listing drew interest from specialized investors in financial services companies and institutional investors in the United States and Europe, the official said. Micex has also benefited from the publicity of mergers and acquisitions in the stock exchange business worldwide, including the announced sale of the New York Stock Exchange.

The seesaw fortunes of the Russian companies that list on Micex have made it one of the world’s most volatile markets. From its inception in 1992 until the start of the 2008 recession, the Russian stock market had been in either the top five performing markets in the world or the bottom five in every year except one.

The company managing the exchange, though, has made an argument that it is a far safer bet than the companies it lists because it earns fees on both long and short trades and from foreign currency deals, its original niche.

The Russian central bank founded Micex as a market for trading rubles into foreign currency legally, something that had been tightly regulated in the past. That was the best thing that ever happened to early post-Soviet financiers, who knew which way that bet would go and made easy fortunes on Micex.

The exchange evolved to trade stocks when they appeared in Russia in the early 1990s and presided over the panic selling of state bonds in the 1998 default. By 2011, it had become the dominant exchange after merging with a rival, the Russian Trading System. The main product of the Russian Trading System was a dollar-denominated derivative of an index fund for the Russian market, used primarily to short the entire country’s economy, a position sometimes used as a hedge by nervous companies making other investments. Last year, this product accounted for 34 percent of all derivatives trades on Micex.

Other revenue streams are interest income from obligatory deposits that brokerage firms place with the exchange to trade, fees charged to issuing companies and data sales.

The central bank will remain the largest shareholder after the issue of 10 to 15 percent of the shares. The organizing banks are expected to announce the size of the float on Friday.

Mattias Westman, founder of Prosperity Capital Management, the largest foreign portfolio investor in Russia, which manages $4.5 billion in stocks and other assets, many of which are traded on Micex, said owning shares in the stock exchange was also a way to bet on the strengthening domestic financial system.

Micex’s offering, he said, “is a symptom of the whole market maturing,” 20 years after the end of the Soviet Union.

Bruce Bower, portfolio manager at Verno Capital, a Russia-focused fund, said the exchange’s mix of offerings for investors wanting either long or short positions, its interest earnings and its fees for currency exchange made it a relatively safe stock as “the financial utility for Russia.”

Article source: http://dealbook.nytimes.com/2013/02/14/after-strong-i-p-o-russias-main-stock-exchange-begins-trading-2/?partner=rss&emc=rss

In New Year, Errors Mount at High-Speed Exchanges

The latest example came Wednesday night when the nation’s third-largest stock exchange operator, BATS Global Markets, alerted its customers that a programming mistake had caused about 435,000 trades to be executed at the wrong price over the last four years, costing traders $420,000.

A day earlier, the trading software used by the National Stock Exchange stopped functioning properly for nearly an hour, forcing other exchanges to divert trades around it. The New York Stock Exchange, the nation’s largest exchange, has had two similar, though shorter-lived, breakdowns since Christmas and two separate problems with its data reporting system. And traders were left in the dark on Jan. 3 after the reporting system for stocks listed on the Nasdaq exchange, the second-biggest exchange, broke down for nearly 15 minutes.

The stream of errors has occurred despite the spotlight on the exchanges since a programming mishap nearly derailed Facebook’s initial public offering on Nasdaq last May and BATS’s fumbling of its own I.P.O. two months earlier. At the end of 2012, a number of exchange executives said they were increasing efforts to reduce the problems. But market data expert Eric Hunsader said that the technology problems have become, if anything, more frequent in recent weeks.

Matt Samelson, the founder of the industry consultancy Woodbine Associates, said, “Now that the world is watching, everyone is trying to be more rigorous. Their increased rigor is not yielding the benefits they hoped.”

Joe Ratterman, the chief executive of BATS, said Thursday that he viewed the firm’s announcement this week as a sign of markets that were functioning well, given his firm’s ability to find a problem that he called an “extreme edge-case scenario.”

“We discovered this problem and reported it — it’s a positive thing,” Mr. Ratterman said. “It’s being covered as if it’s a negative issue, and a continuation of a series of problems.

“Call me an optimist, but I see positive indications of the markets moving forward,” he said.

Regulators and traders have said that malfunctions are inevitable in any complex computer system. But many of these same people say that such problems were less frequent before the nation’s stock exchanges were thrown into a technological arms race in the middle of the last decade as a host of upstart exchanges like BATS challenged incumbents like the New York Stock Exchange.

The nation’s 13 public stock exchanges now compete fiercely to offer the latest, fastest and most sophisticated trading software, in part to appeal to the high-speed trading firms that have come to account for over half of all stock trading. With each tweak comes a new opportunity for a mistake to be inserted into the system.

“The rate of change is getting so rapid that the quality assurance process isn’t as robust as it should be,” said George Simon, a partner at Foley Lardner who used to work at the Securities and Exchange Commission, which oversees the nation’s stock markets. “This has been something that has been brewing now for five years, and it keeps getting worse.”

Mr. Simon said that in less fragmented and complex markets, technology problems had been less common.

The market malfunctions have been assigned part of the blame for the diminishing amount of trading happening on the nation’s stock exchanges. The total volume of daily trading was down 17.6 percent in 2012 from 2011, according to Rosenblatt Securities.

Mr. Samelson of Woodbine Associates said the problems had long rattled retail investors, but they were becoming increasingly worrying for big institutional investors as well. While he was talking about the BATS mishap on Thursday, he received a text message from one big investor who said, “as if we didn’t have enough bad news.”

The problem reported by BATS was different from many other recent problems because it did not halt trading. Instead, the programming error meant some trades were not executed at the best price, as exchanges are required to do by law.

Only a small category of very complex trades were executed at the wrong prices, all of them coming from investors trying to do a so-called short sale of stocks. The 435,000 erroneous trades were only 0.003 percent of all trades over the last four years, according to Mr. Ratterman.

“This is so hard to identify that no customer ever identified it,” Mr. Ratterman said.

Mr. Ratterman said that 119 member firms lost money. He said he was not yet sure if BATS would compensate its members for their losses. BATS informed the members and the S.E.C. of the problem on Wednesday night, after discovering it on Friday.

The S.E.C. was not previously aware of the problem, but the enforcement division is already reviewing the issue, according to people with knowledge of the review who spoke on the condition of anonymity.

S.E.C. officials have acknowledged that they do not have adequate tools to properly police the high-speed, highly fragmented stock markets. But the agency has started several initiatives to catch up. Last year, the agency purchased software from a high-frequency trading firm that will give regulators a real-time window into the markets.

The agency has also been considering a rule that would force exchanges to submit their technology for regulatory review, something that some exchanges currently do voluntarily. At recent hearings called to examine the automation of the markets, members of the industry have supported other reforms to strengthen the system, like kill switches that would automatically stop errant trading.

Mr. Ratterman said regulators could make small changes to rules that would simplify the market infrastructure and make it less prone to mishaps.

But executives at some other exchanges have said that more sweeping changes are necessary. At a hearing in December, Joe Mecane, an executive at the New York Stock Exchange’s parent company, said that “technology and our market structure have created unnecessary complexity and mistrust of markets.”

Amy Butte Liebowitz, the former chief financial officer at the exchange, said that “you are only going to see more and more of this until someone says, ‘I’m not going to put up with this level of errors.’ ”

Article source: http://www.nytimes.com/2013/01/11/business/in-new-year-errors-mount-at-high-speed-exchanges.html?partner=rss&emc=rss

DealBook: Upstart Exchange in $8.2 Billion Deal for N.Y.S.E.

Traders on the floor of the New York Stock Exchange on Thursday.Andrew Kelly/ReutersTraders on the floor of the New York Stock Exchange on Thursday.

8:39 a.m. | Updated

The owner of the 220-year-old New York Stock Exchange on Thursday agreed to an $8.2 billion deal that would give control of the longstanding symbol of American capitalism to an upstart competitor.

NYSE Euronext said that it would sell itself to the IntercontinentalExchange for about $33.12 a share in cash and stock. The combined company would have headquarters in both ICE’s home of Atlanta and in New York.

The takeover signals the revival of consolidation in the world of market operators, after a wave of deals dissipated amid concerns over antitrust and nationalist sentiment. ICE had partnered with NYSE Euronext’s main rival, the Nasdaq OMX Group, in an $11 billion hostile bid for the Big Board’s parent, but that offer was blocked by the Justice Department.

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And NYSE Euronext had sought to combine with Deutsche Börse, creating a global giant in the trading of derivatives. But that merger was stymied by European antitrust regulators.

Thursday’s deal is expected to run into fewer problems. ICE and NYSE Euronext have little overlap: the former focuses on the trading of commodities like energy products, the latter on stocks and derivatives.

Indeed, while the New York Stock Exchange, with its opening bell and floor traders, has been the public image of a stock market for two centuries, it is NYSE Euronext’s businesses in the over-the-counter trading of derivatives — including the Liffe market in London — that is the main attraction in the merger talks.

Jeffrey Sprecher, the chief of the IntercontinentalExchange, would keep that role in the newly enlarged market operator.Lucas Jackson/ReutersJeffrey Sprecher, the chief of the IntercontinentalExchange, would keep that role in the newly enlarged market operator.

As part of the deal, ICE will consider spinning off NYSE Euronext’s European stock market operations.

Shareholders of NYSE Euronext would own about 36 percent of the combined company.

ICE’s chief executive, Jeffrey C. Sprecher, would keep that role in the newly enlarged market operator. NYSE Euronext’s chief, Duncan L. Niederauer, would be president.

Both companies relied on armies of advisers. ICE was advised by Morgan Stanley, BMO Capital Markets, Broadhaven Capital Partners, JPMorgan Chase, Lazard, Société Générale and Wells Fargo. It received legal counsel from Sullivan Cromwell and Shearman Sterling.

NYSE Euronext was advised by Perella Weinberg Partners, BNP Paribas, the Blackstone Group, Citigroup, Goldman Sachs and Moelis Company. It was counseled by Wachtell, Lipton, Rosen Katz; Slaughter May; and Stibbe N.V.

New York Stock Exchange

Article source: http://dealbook.nytimes.com/2012/12/20/upstart-market-operator-clinches-8-2-billion-deal-for-n-y-s-e/?partner=rss&emc=rss

DealBook: N.Y.S.E. Is in Talks for Merger

A proposed merger of the New York Stock Exchange and the Intercontinental Exchange was valued at about $8 billion.Brendan Mcdermid/ReutersA proposed merger of the New York Stock Exchange and the Intercontinental Exchange was valued at about $8 billion.

An $8 billion exchange merger is in the works that underscores how the global market for derivatives has eclipsed that for stocks.

The owner of the venerable New York Stock Exchange is in talks to be acquired by an upstart commodities and derivatives trading platform, according to people briefed on the matter. The IntercontinentalExchange is expected to offer about $33 a share, with two-thirds of that in stock, one of these people said. That represents a premium of 37 percent to NYSE Euronext’s closing stock price on Wednesday.

A deal could be announced as soon as Thursday morning, though these people cautioned that talks may still break down.

While the New York Stock Exchange, with its opening bell and floor traders, has been the public image of a stock market for two centuries, it is NYSE Euronext’s businesses in the over-the-counter trading of derivatives — including the Liffe market in London — that appear to be the main attraction in the merger talks.

IntercontinentalExchange, or ICE, was founded in 2000 and is based in Atlanta. It competes fiercely with the CME Group, a derivatives trading powerhouse that owns the Chicago Mercantile Exchange and the Chicago Board of Trade.

More than a year ago, ICE teamed up with the New York exchange’s chief rival, the Nasdaq OMX Group, to make a hostile bid for NYSE Euronext. The two had sought to break up their older competitor’s plan to merge with Deutsche Börse of Europe, which would have created a powerful trans-Atlantic company with a big market share in the trading of stocks and derivatives.

Under the terms of that deal, valued at about $11 billion, Nasdaq would have taken NYSE Euronext’s equities business, while ICE would have assumed the derivatives operations.

But the Justice Department threatened to block that joint offer, on the ground that combining NYSE Euronext and Nasdaq would create an overwhelming monopoly in the world of stock trading.

The planned merger of NYSE Euronext and Deutsche Börse itself fell apart early this year after European antitrust regulators opposed the combination, on the ground that it would corner too much of the market in exchange-traded derivatives.

But the newest merger might pose fewer problems because ICE focuses on commodities like oil, natural gas and cotton, while NYSE Euronext plies mainly in stock and stock options and derivatives.

And unlike several proposed mergers, like that of the Singaporean and Australian stock exchanges, which fell apart last year on nationalist concerns, this potential deal would take place between two companies from the same country.

After its deal with Deutsche Börse collapsed, NYSE Euronext was left to conduct some soul-searching. At the time, the company said that it would most likely look to smaller acquisitions and cost-cutting.

The trading of stocks has become a less attractive business. The New York Stock Exchange is now responsible for only about 11 percent of all stock trading, while NYSE Euronext’s electronic Arca platform accounts for another 12 percent, according to industry data.

The average number of American stocks traded each day has fallen every year since 2009, and has continued to decline over the course of 2012, according to statistics from Credit Suisse. The volume of trading in futures and options, where ICE is focused, has also fallen since last year, but less than in stocks.

A tie-up with ICE, however, would link NYSE Euronext to one of the industry’s fastest-growing exchanges. ICE has some of the highest profit margins in the business.

It might also reap some of the benefits that have driven a decade-long spree of consolidation among exchanges. Such companies have long sought to gain the greater scale and cost savings that come from combining back-end operations and staff cuts.

Still, the potential merger would sharply expand ICE, which despite its bigger market value is a smaller company. It has a little more than 1,000 employees, while NYSE Euronext has 3,077.

It isn’t clear whether other exchanges would seek to break up the proposed transaction. The CME Group is a candidate to express opposition. But the firm appeared to have little appetite in bidding for NYSE Euronext last year, and it may run into antitrust concerns.

Other potential spoilers, including the Hong Kong and Singaporean exchanges, could run into nationalist concerns.

Shares of NYSE Euronext rose more than 21 percent in after-hours trading, to $29.20, after The Wall Street Journal reported news of the talks.

Nathaniel Popper contributed reporting.

Article source: http://dealbook.nytimes.com/2012/12/19/ice-said-in-talks-to-merge-with-nyse-euronext/?partner=rss&emc=rss

U.S. Stock Markets Largely Unchanged

The Dow Jones industrial average finished down 0.31 points at 12,815.08, as of 6 p.m. Monday. The closing level of the Dow was revised several times after trading closed. The New York Stock Exchange experienced a trading glitch during the day, forcing it to alter its normal procedure for determining the closing prices of some stocks.

The Dow spent the day alternating from small gains to losses, never rising more than 46 points or falling more than 32.

The Standard Poor’s 500-stock index edged up 0.18 points to 1,380.03. The Nasdaq composite fell 0.61, to 2,904.26.

Trading was light. The federal government and the American bond market were closed for Veterans Day, and no economic reports were released.

Federal spending cuts and tax increases are scheduled to begin with the new year, unless a divided Congress and the White House can find a compromise.

Some traders thought the tentative trading action was inevitable, because there has been no positive or negative news about the economy or the possibility of a deal to avoid the spending cuts and tax increases.

“Nothing good is going on,” said Scott Freeze, president of Street One Financial in Huntingdon Valley, Pa. “Everything forward-looking remains dreary.”

Last week, after voters returned a long-deadlocked and divided government to Washington, the Dow dropped 434 points in two days and had one of its worst weeks of the year.

Even if lawmakers work out a compromise, as they usually do, the political fight until then is sure keep investors on edge, pitching the stock market back and forth until the matter is resolved. Economists say the so-called fiscal cliff could cost the economy $800 billion and three million jobs and would steer the United States back into recession.

President Obama, a Democrat, and Speaker John Boehner, a Republican, have spoken of compromise but appeared to take firm stances on some issues. Mr. Obama will meet with labor representatives as well as other liberal groups on Tuesday. He will hold separate meetings with the business community on Wednesday.

The effect on the markets has been widespread. Fears about the American economy were blamed for keeping a lid on European markets and Asian markets, which closed mostly lower.

In Greece, lawmakers passed a new austerity budget, and the country’s international lenders drafted a report saying it had made progress in righting its finances. Greece is hoping the other euro countries will give it an additional $40 billion in bailout loans. The budget and the report are crucial steps toward that goal.

Still, the new bailout is no sure thing: some of the potential lenders must seek approval from their parliaments. Greece’s main stock market index closed down 3.6 percent.

Mr. Freeze of Street One Financial was among the underwhelmed. “At this point, all the Greek news is just noise,” he said. “None of these bailouts really solve the underlying problem. Now, if all of a sudden Spain became incredibly solvent and its unemployment rate went to 5 percent, then you’d see” a reason to buy.

Leucadia National announced it would buy the investment banking firm Jefferies Group. Jefferies’s chief will run the combined company. Stock in Leucadia, a holding company with investments in eclectic industries including beef processing and medical products, dropped 66 cents, or 3 percent, to $21.14. Jefferies shares soared $2, or 14 percent, to $16.27.

Article source: http://www.nytimes.com/2012/11/13/business/daily-stock-market-activity.html?partner=rss&emc=rss

NYSE Euronext Says It Intends to Open on Wednesday

NEW YORK (Reuters) – New York Stock Exchange operator NYSE Euronext intends to open as usual on Wednesday at 9:30 a.m. Eastern Time, but testing its contingency plan as well, “just in case,” Larry Leibowitz, the company’s chief operating officer, said on Tuesday.

“As of now, we are shooting hard to open tomorrow and fully expect to do so,” he said in an interview.

(Reporting By John McCrank)

Article source: http://www.nytimes.com/reuters/2012/10/30/business/30reuters-storm-sandy-nyse-open.html?partner=rss&emc=rss

DealBook: Stock Exchanges Prepare to Open

The New York Stock Exchange remained closed on Tuesday.Carlo Allegri/ReutersThe New York Stock Exchange remained closed on Tuesday.

Wall Street is preparing to open for business on Wednesday as New York slowly recovers from the wreckage of Hurricane Sandy.

The New York Stock Exchange and Nasdaq both plan to resume normal trading on Wednesday following the storm that flooded many parts of Manhattan and prompted widespread power outages. The market closed for two days as Hurricane Sandy battered down on the East Coast, forcing thousands of people to evacuate and causing millions of dollars in damage.

“It’s incredibly important to open these markets,” said Miranda Mizen, director of equities research at TABB Group. “It says New York is open for business.”

The New York Stock Exchange is one of the world’s most identifiable symbols of capitalism and its inability to operate is often viewed as a larger statement on stability of United States stock markets and the economy.

It’s rare for the stock markets to close operations for two days. The last time the New York Stock Exchange did so for weather-related reasons was 1888.

Hurricane Sandy Multimedia

After terrorists attacked various American landmarks including the World Trade Center, the Big Board closed for four days. The reopening was heralded around the world as a sign of the strength of the United States.

“Barring any unforeseen circumstances, we will be open,” said Larry Leibowitz, the chief operating officer of the NYSE Euronext, the parent of the Big Board. “We all see the need to get the exchange working as quickly as we can.”

Wall Street — the extensive network of exchanges, banks and regulators — has spent the past two days testing systems and assessing the markets in an effort to ensure the trading day goes smoothly. Roughly 30 staff members at the N.Y.S.E. have been sleeping at the company’s headquarters.

Connectivity, the trade execution between the firms and the exchanges, has been a big focus. Representatives from various utility companies have been present on many conference calls on the issue.

Mr. Leibowitz said that the N.Y.S.E. has been able to connect to others, but some trading firms with damaged data centers or facilities have had issues. One nearby building that houses several firms, according Mr. Leibowitz, sustained significant damage and could hamper their ability to operate. Such firms are now scrambling to move operations and do repairs to be ready for the open on Wednesday.

“Right now, there are a lot of connectivity problems,” Mr. Leibowitz said.

The N.Y.S.E. is set to open both the electronic platform and the physical trading floor. The exchange has plans for the 200 or so floor traders to be in place. A number of traders and other exchange personnel live in areas where mass transit has been suspended, so the N.Y.S.E. has arranged cars for many people.

The exchange had battled earlier rumors that the trading floor was under three feet of water. While the stock exchange appeared to be unscathed, many other buildings in the vicinity had been flooded and the area remained desolate on Tuesday.

Mr. Leibowtiz, who lives not far from the N.Y.S.E., walked through flooded streets Tuesday morning to get to work. But he said the water stopped about two blocks away from the Big Board.

Peter Eavis and Barry Meier contributed reporting.

Article source: http://dealbook.nytimes.com/2012/10/30/after-hurricane-sandy-stock-exchanges-prepare-to-open/?partner=rss&emc=rss

DealBook: Bracing for Storm, U.S. Stock Markets to Close

The normally busy trading floor will be empty on Monday.Richard Drew/Associated PressThe normally busy trading floor will be empty on Monday.

12:50 a.m. | Updated

All United States stock and options markets will close on Monday as Hurricane Sandy approaches, reversing course as Wall Street braces for the storm to barrel through the heart of the country’s financial center.

The decision, made late Sunday night, leaves the American stock markets closed for weather conditions for the first time in nearly three decades. The New York Stock Exchange had previously planned on closing only its physical trading floor, while allowing for trading on its Arca electronic exchange. It has now decided to halt all trading.

The Nasdaq and BATS stock markets, which are built on electronic trading, also decided to close. The CME Group, which operates the Nymex commodities exchange, said that it would halt trading on its physical commodities floor and on its electronic stock futures and options exchanges.

The Securities Industry and Financial Markets Association, or Sifma, said in an e-mailed statement that it was calling for bond trading, which is all done electronically, to close at noon Monday, though it left the final decision to member firms.

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The N.Y.S.E. last closed trading for weather reasons in 1985, when Hurricane Gloria lashed the metropolitan area. The opening of trading has been delayed a number of times, including during a blizzard in January 1996. The exchange was closed for three days after the terrorist attacks on Sept. 11, 2001.

Since then, the business has largely moved onto electronic systems that are meant to work without the traditional army of floor specialists barking out orders. Exchanges had hoped that computerized platforms would allow the markets to open without endangering even a smaller number of staffers.

Hurricane Sandy Multimedia

But after day-long discussions with city and state officials, brokerages, the Securities and Exchange Commission, the Federal Reserve Bank of New York and Sifma, the market operators decided to be even more cautious and halt trading for the day, according to a person briefed on the matter.

“We support the consensus of the markets and the regulatory community that the dangerous conditions developing as a result of Hurricane Sandy will make it extremely difficult to ensure the safety of our people and communities, and safety must be our first priority,” the N.Y.S.E. said in a statement late on Sunday.

The decision came late: Nasdaq made its final determination around 10:30 p.m. Sunday night, according to a person briefed on the exchange’s decision.

Under the N.Y.S.E.’s contingency plan, traders would have routed their orders onto the company’s electronic exchange, known as Arca, while electronic options trading will operate normally. Volume was expected to be muted, and the decision over whether to open on Tuesday was to be determined later.

“The building is closed, but the market is open,” Duncan L. Niederauer, the chief executive of NYSE Euronext, said in an interview by phone before the decision to shut all trading was made.

A spokesman for the N.Y.S.E., Robert J. Rendine, said the company’s data center in Mahwah, N.J., which handles all trade orders, is intended to withstand a storm of Hurricane Sandy’s strength. It also has generators and enough fuel to run for almost a week at current levels, with emergency plans in place to procure more fuel if needed, he added.

Since 2007, the N.Y.S.E. has offered a “hybrid” model that allows trades to be completed either by humans or by computers through the Arca system. That gave the exchange a contingency plan that was previously unavailable, Mr. Niederauer said. The company has tested the backup plan regularly, most recently in March.

Many big banks are letting their employees work remotely as well, mindful of the suspensions of major transit systems and school closures.

Goldman Sachs and Citigroup said their major offices in Lower Manhattan — which house the firms’ enormous trading floors — would be closed to all but essential personnel. Some Goldman staff members will be asked to work from special centers in Greenwich, Conn., and Princeton, N.J., though the majority of employees at both firms will be allowed to work from home, according to internal memorandums.

“Citi has contingency plans in place including locations that can be utilized to ensure continuity of operations,” Shannon Bell, a spokeswoman for the firm, said in an e-mail statement. “Citi is committed to providing uninterrupted service to our clients during the storm and seeks to minimize any possible impact.”

JPMorgan Chase plans to close an office in Lower Manhattan that is in a potential flood zone, though its other offices will remain open and ready to run off backup generators if necessary.

Decisions on which Chase retail bank branches would be closed were still being decided on Sunday night, according to a person briefed on the matter. Chase also said it would waive overdraft and late fees for customers in seven states affected by the hurricane, including New York, New Jersey and Connecticut. Ms. Bell of Citi said that the firm’s branches in affected areas would be closed.

Several of these firms plan to run some of their technology and trading operations through offices in Europe and Asia.

Article source: http://dealbook.nytimes.com/2012/10/28/nyse-plans-to-close-its-trading-floor/?partner=rss&emc=rss