This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The 5 Dumbest Things on Wall Street This Week: Aug. 3

1 (tie). Knight Capital Goes Dark

Speaking of a market apocalypse, Knight Capital (KCG - Get Report) better find its white knight in a hurry, otherwise it could go dark for good.

Knight, one of the largest U.S. market makers, said losses from Wednesday's trading breakdown total $440 million, and as a result the company is "actively pursuing its strategic and financing alternatives to strengthen its capital base." Knight's massive loss chews right through its net income of $3.3 million in the second quarter on revenue of $289.3 million. Shares of the computerized trading company lost almost two thirds of its value this week, falling from more than $10 a share on Tuesday to less than $4.

As we wait to see who responds to Knight's SOS signal, we just have one small question: What the heck happened here? Did they hire UBS traders to run the show or Suntech's euro bond analysis team?

Prices in 140 NYSE (NYX)-listed stocks were flying all over the place for more than 45 minutes. Clueless traders were running around screaming at each other. CNBC's Bob Pisani was scrambling for coverage.

That was no mere "technology issue" as Knight is calling it. That was the freaking Tet Offensive at Broad and Wall.

Seriously, after last year's flash crash and the Facebook IPO fiasco, we thought the brainiacs running Wall Street's back offices would have a better handle on things. Or at least they would know how to shut down the machines should they run amok.

But that wasn't the case at all Wednesday morning. Knight couldn't pull the plug on its new software in time and is now in danger of having its plug pulled.

And for those still wondering why worn-out investors are waving goodbye to Wall Street, well, the knuckleheads at Knight provided yet another answer.

--By Gregg Greenberg in New York

Follow TheStreet on Twitter and become a fan on Facebook.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
6 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
STP $0.53 0.00%
AAPL $95.18 1.64%
DNDN $0.06 -6.02%
GM $31.25 -1.57%
KCG $13.68 -2.43%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs