Retail Traders Face Technical Issues During US Stock Market Rout

A pedestrian walks by a TD Ameritrade office in San Francisco, Calif., on Nov. 25, 2019. (Justin Sullivan/Getty Images)

Thousands of frustrated online brokerage users faced service disruptions amid a market selloff for the third consecutive trading session, according to data from the outage tracking website Downdetector.com.

At the start of the opening bell on the New York Stock Exchange (9:30 a.m. New York time) on Aug. 5, there were as many as 15,000 reports of outages on the Charles Schwab platform. In addition, Fidelity, TD Ameritrade, and Vanguard experienced 1,750 to 3,600 users reporting disruptions at the peak of the downtime.

Outage reports steadily decreased throughout the trading day.

“Due to a technical issue, some clients may have difficulty logging in to Schwab platforms,” the financial institution stated on social media platform X. “Please accept our apologies as our teams work to resolve the issue as quickly as possible.”

The company later confirmed that “a technical issue experienced by some clients” was resolved.

“We recognize some investors are experiencing delays when logging in to their accounts,” Vanguard wrote in a now-deleted post on X. “We are working diligently to restore functionality and apologize for any inconvenience.”

Fidelity also responded to user comments on social media to confirm that login issues had been resolved.

Robinhood Markets, a popular platform for retail traders, confirmed that it resumed overnight trading following a temporary suspension. The outlet launched a 24-hour market service in May 2023, allowing investors to trade anytime from 8 p.m. New York time on Sunday to 8 p.m. on Friday.

Users commonly reported being unable to log into their accounts, while others said they could only stay in their accounts for a short time before being kicked out.

The incidents occurred at a time when global financial markets, including the leading U.S. benchmark indexes, are experiencing a widespread rout.

The Dow Jones Industrial Average tumbled as much as 1,100 points on Aug 5. The tech-heavy Nasdaq Composite Index plunged about 4.1 percent, and the S&P 500 declined roughly 3.3 percent.

Since July 16, the S&P 500 has erased more than $2 trillion of market cap, equaling $357 billion per trading day, according to data calculated by The Kobeissi Letter.

U.S. Treasury yields, energy commodities, the metals market, and cryptocurrencies also were swimming in red ink.

During extreme volatility in the financial markets, digital trading platforms can sometimes experience technical problems since there are massive volumes of retail investors executing buy-and-sell trades.

The Epoch Times reached out to the affected companies for comment.

Traders work on the floor of the New York Stock Exchange during afternoon trading in New York City, on Aug. 2, 2024. (Michael M. Santiago/Getty Images)

What Happened?

The U.S. stock market began its recent downturn on Aug. 1, when the Institute for Supply Management’s Manufacturing Purchasing Managers’ Index (PMI)—a gauge of the sector’s direction—deepened into contraction territory.

The S&P Global Manufacturing PMI also slipped into contraction.

The July jobs report exacerbated U.S. recession concerns, with the unemployment rate edging up to 4.3 percent, from 4.1 percent. The reading triggered the Sahm rule, an indicator that the U.S. economy is in a recession because the three-month moving average is 0.5 percent higher than the 12-month low.

Economic and market conditions in Japan also contributed to weakness in the global financial markets.

The latest developments have initiated calls for the Federal Reserve to cut interest rates immediately and aggressively at the final three meetings of 2024.

“If the crater in markets continues up to the Fed’s September meeting, it’s likely the Fed’s rescue will start with a 50 or even 75 basis point move down,” Jeff Klingelhofer, co-head of investments at Thornburg Investment Management, said in an emailed statement.

“Many data points will either confirm or question if this is a recession, and if so, how deep it is. If the data points significantly more toward the likelihood of a recession at the September meeting, then the Fed should be concerned with inflation missing because it’s below 2% and unemployment is moving up. The Fed will believe their cutting cycle will cushion the fall.”

James Knightley, ING’s chief international economist, thinks that market fears are overblown, referring to the latest Institute for Supply Management non-manufacturing PMI that shifted to expansion last month from contraction.

“As such this doesn’t fit the impending recession narrative that has gripped markets over the past couple of trading sessions and should go some way to diminishing the pricing of an inter-meeting rate cut,” he said in an Aug. 5 note.

Appearing on CNBC on Aug. 5, Jeremy Siegel, a professor emeritus of finance at the University of Pennsylvania’s Wharton School, recommended an emergency 75-basis-point rate cut and “another 75 basis-point cut indicated for next month at the September meeting—and that’s minimum.”

“The fed funds rate right now should be somewhere between 3.5 percent and 4 percent,” Siegel added.

According to the CME FedWatch Tool, the futures market is penciling in an 81.5 percent chance of a half-point rate cut.