Data Errors Plague Stock Traders in Volatile Week

Volatile stock markets, recession fears and the U.S.-China trade fight have traders on edge. Now, they are grappling with another problem: garbled data.

The troubles started Monday with a glitch on a key market-data feed operated by the New York Stock Exchange. That was followed by what looked like calamitous drops in Vanguard Group mutual funds, incorrect prices for stocks like

Apple
Inc.

being flashed over Bloomberg LP terminals and the Dow Jones Industrial Average suffering a mysterious outage.

The errors didn’t cause the Dow’s 800-point drop on Wednesday, and they didn’t lead to widespread disruptions, like some past market snafus. But they were a reminder of data’s centrality to today’s markets and how any problems can further rattle investors when stocks are already gyrating.

Visitors to Vanguard’s website on Monday evening saw many funds in free fall. At one point, the site showed the Vanguard Wellesley Income Fund down 56% and the Vanguard Target Retirement Income Fund down 46%.

The reported drops prompted consternation on Bogleheads.org, a community website for Vanguard investors. “Many funds screwed up. They have some explaining to do,” wrote a user named SpringMan.

But it wasn’t real. “This was a marketwide issue, not a Vanguard glitch,” a spokeswoman for the mutual-fund giant said. She said the fund values were corrected within a few hours and blamed the problem on the NYSE data-feed incident.

A piece of networking hardware had malfunctioned earlier Monday in the NYSE’s main data center in Mahwah, N.J., according to the Consolidated Tape Association, an industry group that oversees the data feed. The problem caused delays in reporting information over a public feed that broadcasts real-time data on NYSE-listed stocks, an issue that took about six hours to resolve, the CTA said.

A NYSE spokesman declined to comment.

Also affected by the glitch: More than 20 indexes including the Dow and the S&P 500 were initially reported at incorrect values on Monday and had to be recalculated, according to S&P Dow Jones Indices, the entity officially responsible for publishing them. Corrected index values were distributed throughout the day on Tuesday, an S&P spokeswoman said.

S&P 500 options were in turn impacted. Exchange operator Cboe Global Markets Inc. said trades in some options contracts that expired Monday, using incorrect index values, would need to be revisited. One options-market veteran in Chicago said the incident could have been worse, but the impact of the recalculation was minor. “It was a fairly scary thing, but in the end didn’t matter much,” he said.

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Other data disturbances continued on Tuesday. The Dow stood still at 26290.63 for about 13 minutes on Tuesday afternoon because of an issue at S&P. “Our index management team has already resolved the issue and is currently assessing any necessary remediation to avoid further interruptions,” the S&P spokeswoman said.

Then when markets closed at 4 p.m., traders were flummoxed when data providers like Bloomberg and FactSet showed incorrect closing prices for dozens of stocks. Apple—which had been up more than 4% for the day—suddenly seemed to revert to its closing price from Monday of $200.48 a share. About 15 minutes later, the correct closing price of $208.97 appeared on traders’ screens.

“It raised a bit of a red flag,” said

Karyn Cavanaugh,

a strategist with Voya Investment Management who was briefly puzzled by the bad prices. “It kind of reminds you just how reliant we are on data.”

The issue was caused by erroneous trades, according to Nasdaq Inc., which generates official closing prices for Apple and other Nasdaq-listed stocks. At about 4 p.m. on Tuesday, a brokerage executed trades in 80 stocks, including Apple,

Bank of America
Corp.

and

General Motors
Co.

at Monday’s closing prices instead of Tuesday’s, said Ed Coughlin, director of trading services at Nasdaq. He declined to name the brokerage.

The brokerage—which canceled the trades minutes later—incorrectly flagged them as executed during normal trading hours instead of as after-hours trades, said Mr. Coughlin. That confused data providers, he said. “Their methodology is looking at the tape and saying, ‘what is the last trade?’” he said.

Bloomberg and FactSet rejected that explanation, noting that the data warehouse where the erroneous Apple trade was recorded is operated by Nasdaq. “We believe the issue at hand was associated with a Nasdaq feed,” a FactSet spokeswoman said. A spokesman for Bloomberg agreed. Mr. Coughlin said Nasdaq handled the situation properly.

Mishaps like the NYSE’s data-feed glitch show how a single tech failure can ripple through markets, said Christopher Nagy, founder of Healthy Markets Association, a group of investment managers.

“Because of the delayed reporting, it impacted a ton of trades and firms looking to value mutual funds, indexes and more,” Mr. Nagy said. “So the pricing of thousands of securities were off—at root—because a single piece of hardware fried.”

Write to Alexander Osipovich at alexander.osipovich@dowjones.com

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