Nasdaq 'Flash Freeze' to chill investor confidence in markets?
Recapping the day's news and newsmakers through the lens of CNBC.
The 'Flash Freeze'
Amazon crashes. Mark Zuckerberg's Facebook account is hacked. Goldman Sachs botches a hundred million or so in options action. And now, in a much more critical market context, there's the Nasdaq "Flash Freeze."
From the Facebook IPO debacle to today's trading halt, the Nasdaq has figured prominently in what many market experts worry is a growing list of reasons for investors to lose faith in the markets. And from the Flash Crash to BATS Global Markets' IPO problems and the growth of high-frequency trading in general, "Whoops ... again" and "Rise of the machines" panic, have become all too common refrains among ordinary investors.
Nasdaq halted all trading—and the NYSE halted all trading in Nasdaq securities—just after noon today because of a problem in sending out quotes, and didn't resume trading until 3:25 p.m., at which point, things seemed to be back to "normal." Some market experts think the panicked reaction could be short-lived, and the "Flash Freeze" become a minor footnote in market history.
"I've never seen anything like this in my life. It's horrible."
—Dave Rovelli, managing director of U.S. equity trading at Canaccord Genuity
"On half the trading desks on the Street you wouldn't even know the Nasdaq had been halted."
—Dave Lutz, managing director of trading at Stifel Nicolaus
While the Nasdaq was dark ...
The Nasdaq went dark for more than three hours, but after a string of bad days, stocks—those that could be traded—rose in the wake of encouraging economic data. The Conference Board's index of leading economic indicators was up in July after being flat in June, and an early look showed the best reading since March for the U.S. Manufacturing Purchasing Manager's Index.
The euro zone's flash composite purchasing manager's index hit its highest level since June 2012, while the reading for China exceeded the key 50 mark for the first time in four months, signaling expansion.
"Overall, the survey provides hope that the second quarter's rise in euro zone GDP was not a one-off."
—Jonathan Loynes, chief economist at Capital Economics
Unemployment is down, unless it's up
Unemployment claims from the government, though up a tad last week, held near a six-year low, which looks pretty good.
So what's the deal? Is the jobs news good or bad? It depends who you talk to.
A Gallup poll, generally good at foreshadowing future changes, suggests unemployment is trending up.
Especially worrisome with either poll: the high rate of underemployment, at 14 percent for the government, 17.7 percent for Gallup.
"The employment-to-population ratio is basically bumping along the lows of the cycle. We definitely still have a long way to go."
—Jacob Oubina, senior economist at RBC Capital Markets
Is this how you get class warfare?
Now could be a good time to go stealth with conspicuous displays of executive wealth.
Employees may be a bit edgy over their falling incomes.
A new analysis shows the average American household is earning about 4.4 percent less than at the end of the Great Recession four years ago. Meanwhile, the SEC is moving to re-impose a requirement that companies tell employees just how much more the CEO makes than they do.
"While incomes are down about 4 percent from 2009 levels, for the typical American family they are down 7 percent from 2000 levels. So this is an extremely long-term trend that people aren't finding a lot of ways to explain."
—CNBC's Kelly Evans
Obama: Colleges need a wake-up call
Taking your kid to college this week?
Millions of families are—provoking mixed feelings about wonderful opportunities and horrifying costs.
President Barack Obama is working on a solution, and hitting the road this week on a college affordability bus tour, though the payoff in terms of legislative changes may be years down the road. The idea is to rank colleges, and eventually to use the federal financial aid system to reward schools that do well and punish those that don't. Details still to come.
"Just tinkering around the edges won't be enough. We've got to shake up the current system."
"The education proposals—those aren't likely to be front-burner issues for Congress."
—CNBC's John Harwood
—By Jeff Brown, Special to CNBC.com