Computer Error Sends Stocks Soaring
Shares of Finisar Corp. (Nasdaq: FNSR) quickly shot up 56 percent to $2.10 while sprinting past its average trading volume of 1.5 million shares.
Meanwhile, Avanex Corp. (Nasdaq: AVNX) and Vitesse Semiconductor Corp. (Nasdaq: VTSS) climbed 20 percent on unusually large volumes, too.
Was it insider trading? Merger talks? Elvis/UFO manipulation?
The truth is out there, but it's less exciting than an X-Files episode. The online news service Briefing.com tracked the share surges to a computerized trading glitch at one large (and unnamed) firm. An early morning glitch in a software program that tracks the Russell 2000 Index of small-cap stocks touched off some frenzied buying.
That something was amiss could be seen in the random nature of the gains. Vitesse's semiconductor cousins PMC-Sierra Inc. (Nasdaq: PMCS) and Applied Micro Circuits Corp. (AMCC) (Nasdaq: AMCC) were having normal days; AMCC was even down. Likewise, Avanex Corp.'s (Nasdaq: AVNX) gains weren't rubbing off on optical-components giant JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU).
Not every Russell 2000 stock made out so well. A random check this afternoon showed Krispy Kreme Doughnuts Inc. was just about flat, and Water Pik Technologies Inc. was down slightly.
At press time, it looked as if the stocks might keep some of their gains. Vitesse was still up 13 cents (5 percent) at $2.65, and Finisar was up 10 cents (7 percent) at $1.45. Avanex, once up 6 percent, had pulled back to a gain of 6 cents (3 percent), or $2.34.
If nothing else, the glitch added some amusement to an otherwise dull trading week, as much of Wall Street is on vacation prior to next Monday's U.S. holiday. How dull is it? Briefing.com reported earlier this week that one trader had accepted a $100 dare to drink a bottle of Tabasco sauce. Alas, the trader's firm couldn't raise enough funds from employees to get him to do it.
— Craig "Hot Sauce" Matsumoto, Senior Editor, Light Reading