This is the stock quote for Exelon Co. today. Notice, between 2 and 3 pm eastern time it takes quite a dive.
The strange part is that Exelon Co. was not the only stock to plummet dramatically in value between 2 and 3 pm eastern time today. Here are some screenshots of stock quotes from the Wall Street Journal.
(Full credit for all the graphics below goes to the Wall Street Journal. I want to specifically thank Stephen Grocer for documenting this so well. Read: Six Mega Drops of the Flash Crash; Sam Adams Goes Flat.)
People are calling it the “flash crash.”
For a few minutes between 2 and 3 pm eastern time, a number of stocks were valued at $0.00. Among them Exelon Co. America’s largest nuclear energy provider and Boston Brewing Co. the parent company of Samuel Adams.
Politico reports that
the Dow plunged 998 points before quickly rebounding nearly 400 points. The Dow closed at 10,520.32, a drop of 347.80 – or 3.2 percent.
The broad consensus among journalists is that no one quite knows exactly what happened here. Was it a typo? A real crash? Did someone in the futures market value stocks at $0.00 when perhaps they were worth more? Was this a staged power grab?
I can’t tell you because I have no idea. Apparently no one else does either. I waded through a slew of comments on Hacker News, (yes, you read that right), and learned that the economy is much more complex than I could have ever fathomed.
Just try and make sense of what one commenter said about the fiasco.
The (relatively) gradual rebound in price suggests the trades actually happened. It’s not a removable discontinuity, so to speak.And, frankly, if you were coding an automated trading system, it wouldn’t be that unreasonable to write a “sell at any price” algorithm that doesn’t cover the eventuality that a stock with a market cap as large as these might have literally no bids higher than $0.00. (My highly speculative amateur theory is that this is what actually happened: The NYSE froze trading on these stocks for an extremely brief period, as it did with many stocks today, and a handful of automated trading systems scrambled to electronic exchanges, where volumes were low enough that a $0.00 bid issued by some cleverly well-prepared hedge fund was the best around.)
I can’t vouch for the validity of that statement, because the poster is anonymous and he describes his own theory as “highly speculative” and “amateur.” However, having fought my way through several articles regarding the matter, its the most reasonable explanation I’ve heard yet.
I’ll update this story as more information becomes available.
Raina Bedford
National Politics.
