Quake affects NYSE traders, sparks brief selloff

AP News
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Posted: Aug 23, 2011 5:18 PM
Quake affects NYSE traders, sparks brief selloff

The earthquake that began in Virginia and was felt as far north as New York briefly threatened to reverse Tuesday's stock rally. The Dow Jones industrial average sank 60 points soon after the quake hit, but quickly recovered.

Lou Pastina, head of operations at the New York Stock Exchange, said the street-level trading floor in Lower Manhattan didn't shake. People in many tall buildings in the area felt a rumbling and their employees went outside and gathered on sidewalks, he said. Traders quickly became aware of the quake from television broadcasts.

"It could have been opportunistic selling," Pastina said.

The quake hit at 1:51 p.m. Eastern time. The Dow immediately began falling, then began rising again 32 minutes later, at 2:23 p.m.

The quake reminded investors of the much larger Japanese earthquake and tsunami on March 11.That quake severely damaged the Fukishima Daiichi nuclear power plant.

Two Virginia-based nuclear reactors owned by Dominion Resources Inc. were taken off line automatically by safety systems around the time of the quake. Dominion's stock briefly fell about 1 percent on the news. The stock recovered and ended the day up 85 cents, or 1.8 percent, at $49.10.

Without an immediate explanation for the trembling, uncertainty ruled -- if only for a few moments. Some traders pictured a worst-case scenario, like a terror attack. The World Trade Center destroyed nearly 10 years ago was located just blocks from the stock exchange.

"It's sell first, ask questions later," said Jack Ablin, chief investment officer at Harris Private Bank.

Traders pounce on any information, no matter how incomplete, Ablin said. So the first thing many did upon learning of the quake was to sell. "That edge is measured in seconds, not days. You're always trying to get ahead."

At the NYMEX and COMEX commodities exchanges in Lower Manhattan, some employees and traders decided to leave the building, although there was no evacuation order, said Chris Grams, spokesman for CME Group, the Chicago-based operator of the exchanges.

He said the NYMEX and COMEX exchanges experienced no earthquake-related operations disruptions.

The recently-built NYSE data center was undamaged by the quake, said Pastina. The stock exchange's building structure was quickly determined to be sound enough not to require evacuation. That message was sent to those working in the building, and investors shifted back into buying mode. The Dow ended the day with its biggest gain in eight days. It rose 322.11 points, or 3 percent, to 11,176.76.

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AP Business Writers Mark Jewell in Boston and Chip Cutter in New York contributed to this report.

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