A stock-trading algorithm gone awry appears to have thrown American stock markets into chaos on Wednesday, following a surge of volatile trading after the opening bell. Many of the country’s biggest companies were affected, including Bank of America, Alcoa, General Electric, Berkshire Hathaway, Citigroup, and American Airlines.
Financial news sites have pinpointed the problem to Knight Capital Group. The brokerage firm’s algorithm appears to have triggered purchases and sales of millions of shares for 30 minutes.
Algorithmic trading, where stock transactions are mediated by high-speed data connections and software rather than humans, is something that’s been rapidly overtaking the industry in recent years. The infamous “flash crash†of 2010 led to a loss of 573 points on the Dow Jones Industrial Average in five minutes.
from Ars Technica