That appears to be what happened Thursday afternoon with L-3 Communications Holdings Inc. Shares of the aerospace contractor jumped about 5 percent at 1:07 p.m. New York time, only to lose most of the surge within seconds.
The flash rally coincided with a report from the Wall Street Journal that CenturyLink Inc. was in talks to buy rival phone company Level 3 Communications Inc. The only problem: the scoop was coded to L-3’s stock ticker, not Level 3’s, on Dow Jones Newswires, the electronic news service affiliated with the newspaper. Dow Jones subsequently issued a correction.
Most trading in the $24 trillion U.S. stock market is automated. News services like Bloomberg, Dow Jones and Reuters sell data feeds that transmit information in a machine-readable format, so that algorithms can automatically trade on breaking information.
L-3’s stock closed Thursday at $137.75. It had gotten as high as $143.49 following the coding error. Level 3 — whose discussions to sell to CenturyLink were confirmed by Bloomberg News — ended the day with an 11 percent rally.
