Wake up to Mike Allen’s AM, the 10 stories driving your day

Stories

Machines get blamed for Dow's plunge

NYSE
Traders work on the floor of the New York Stock Exchange on Tuesday. Photo: Spencer Platt / Getty Images

"Lightning-fast trading models, automated sell orders and an arsenal of sophisticated algorithms ... are likely to have made a crazy trading day that much crazier," the WashPost reports:

Why it matters: "The computers react to evidence exponentially faster than any human — think millionths of a second, instead of minutes — and can move en masse, trading at high volumes around the world. That makes them potentially ... dangerous."

  • "If an algorithm appears to sell rashly or emotionally, analysts said, it is because a human taught it to do so."
  • "Some use their mathematical speed to exploit tiny fluctuations in price, buying and reselling within a fraction of a second."
  • "Others attempt to predict how markets will move by analyzing a torrent of data points, including indicators in labor-market news releases and the wording of politicians’ speeches."
More stories loading.