Deadline: tomorrow! Help meet our fall fundraising goal GIVE NOW
The Marketplace Reader

United stock plunges on really big oops

Lori Stassi Sep 9, 2008

UAL stocks tanked — and we mean tanked — when a headline that flashed across trading screens erroneously reported that the carrier was filing for bankruptcy. That triggered a panic and UAL shares lost almost all of their value before Nasdaq halted sale of the stock about an hour later. In fact, the stock lost more than a billion dollars before trading was stopped, according to The New York Times.

Turned out, the headline was based on an old news story — a waaaay old news story. United filed for bankruptcy in 2002. But, as the Financial Times Web site says:

Investors accepted the article as news that the Chicago-based airline had once again sought protection from creditors, a scenario that had grown more feasible in the past year as jet fuel prices skyrocketed.

UAL stocks resumed trading and recovered somewhat after the mistake was discovered and a correction issued. But a lot of shareholders may have seen their stock sold out from under them anyway — especially if they had automatic “stop-loss” sell orders triggered by the plunge.

How could such a thing happen? It’s complicated. The New York Times says an article on the The South Florida Sun-Sentinel Web site (the paper says it was in the archives, not live on the site) was picked up by research firm Income Securities Advisors, which then posted a link to it on a page on Bloomberg News, which sent a news alert based on the old article. NY Times has all the dirty details.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.