Shares of Symantec Corp plunged some 10 percent in a matter of seconds on Tuesday before being halted by the Nasdaq, in the latest instance of what traders called a single-stock "flash crash."
There was no news on the security software maker that triggered the move around 10:11 a.m. EDT (1411 GMT).
Symantec spokesman Cris Paden said somebody put in an order to sell a large number of shares without specifying a bottom limit at which they were willing to sell the stock. That prompted buyers to sharply mark down their bids as they snapped up the shares, prompting the exchange to temporarily halt trading as the circuit breaker was automatically applied to correct the situation.
"It was not necessarily an erroneous trade, so it likely won't be corrected," Paden said, adding that it was the first time such a situation had occurred with Symantec's stock, though he didn't not know how frequently it had happened to shares of other companies.
Approximately 504,000 Symantec shares were traded in a three-second period that saw the stock dive from $24.40 to a low of $21.93 before it was halted. Trades were executed on numerous exchanges, but the heaviest volume was seen on the Nasdaq Stock Exchange, according to Thomson Reuters data.
Equity traders called the sharp move a single-stock "flash crash," in reference to the May 2010 selloff that saw the Dow fall more than 600 points in a matter of minutes. The dominance of electronic trading has been a point of contention for many traders who believe it exaggerates violent moves in equities.
Before the prevalence of high-frequency trading, "a series of market makers would have filled this mistake with substantially less carnage," said Sal Arnuk, co-manager of trading at Themis Trading in Chatham, New Jersey.
"Today's market structure is perfectly set up to take advantage of any and all missteps in the most efficient manner ... if you were day-trading this, or had a stop-loss order in, then you got hit not because of your thesis, but because of a market structure issue."
Shares of Symantec resumed trading five minutes after being halted, and bounced back above $24. They fell 1.3 percent to $24.26 in midday trading.
These moves rattle investors with their violent natures and lack of warning. When this happens, some market makers that provide liquidity will withdraw their bids, while investors are hit with stop-loss orders, which are directions to automatically sell a stock if it breaches a particular threshold.
"Liquidity is an illusion... it's never truly there when it's needed. It vaporizes in an instant, then quickly reappears to trap the suckers who just sold into the void," said Sean McLaughlin, director of investor relations solutions at StockTwits in Boulder, Colorado.
McLaughlin added that he only traded options now "so as to be insulated from these egregious breaches of market structure."