Glitch causes big stock swings

A technical glitch on the stock market caused sharp swings in dozens of stocks early Wednesday, causing confusion and disarray in the first hour of trading.

It was the latest breakdown in the increasingly complicated electronic systems that run stock trading, which have been showing signs of strain as more traders and big investment firms use powerful computers to carry out trades in mere fractions of a second.

Coming less than three months after a snafu tarnished the debut of Facebook, the latest bug on Wall Street threatens to further erode investors' confidence in U.S. financial markets, experts say.

"This is a black eye," said Sal Arnuk, co-founder of Themis Trading and co-author of "Broken Markets." "The plumbing in the system is faulty and is wreaking havoc on investors' confidence."

The problems began when dozens of stocks started moving up and down by wide margins for no apparent reason. Abercrombie & Fitch jumped 9 percent within minutes, hitting $36.75 after closing the night before at $33.80. Wizzard Software shot up above $14 after closing the night before at $3.50, according to data compiled by FactSet.

The culprit was Knight Capital Group. Knight, which takes stock trading orders from big investors and routes them to exchanges, said in a statement that a "technology issue" had occurred that affected the routing of about 140 stocks to the New York Stock Exchange. Later in the day, NYSE said it was canceling faulty trades in six smaller stocks, including Wizzard.

Knight told its clients to send their orders away from its system and said it was reviewing the issue.

The episode was an embarrassment for Knight's chief executive Thomas Joyce, who was one of the biggest critics of the Nasdaq stock market for the way it handled Facebook's initial public offering.