As reported by North Jersey’s Andrew Tangel, Wall Street’s wild ride Tuesday may be due less to rational decisions and more to computers automatically trading stocks at lightning speeds.
Large institutional investors like mutual funds often employ strategies to buy and sell stocks or funds at certain pre-programmed prices.
“Volatility begets volatility,” said John Longo, a professor at Rutgers Business School. “No doubt about it, whenever you have these dramatic moves in a short period of time, programmed trading is largely behind it.”
Much of that trading takes place not on trading floors but within vast rows of computer services inside North Jersey data centers.