By Matt Krantz and John Waggoner
The serious glitch that halted trading on Nasdaq stocks Thursday for roughly three hours is the latest blow against the exchange widely known as being the "high-tech market."
The outage, which happened just after midday because of problems with a quote dissemination system, frustrated traders and investors who were unable to buy or sell stocks.
The question is whether the glitch will harm Nasdaq's efforts as it courts traders to use the system and young companies to list their shares at the exchange.
Problems have periodically plagued the Nasdaq. Most recently, there were trading problems with the initial public offering of Facebook in May 2012, which opened with delays and caused errors with trading and quote systems.
"It is certainly a blow to Nasdaq's image, especially after last year's Facebook IPO stumble, and I suspect it is something that traders and company executives will ask questions about," said Gaston Ceron, analyst with Morningstar.
Nasdaq OMX, the company that operates the Nasdaq exchange, had become synonymous with bringing high-tech to the markets. Its reputation as a technologically advanced exchange helped it lure Microsoft, Intel and Facebook to trade there.
It is premature to say that Nasdaq's business will take a hit from the latest problem, Ceron said. Other markets have had problems, too, including the Flash Crash of 2010, when the Dow Jones industrial average lost more than 1,000 points in about 15 minutes before recovering.
This event is nowhere near the severity of the Flash Crash, said Ian Winer, head of equity trading at Wedbush Securities.
But others say that Thursday's problems are a hit to confidence.
"It's not like your cable going out for a day," says Jim Lowell, president of Adviser Investments in Needham, Mass. "It couldn't have come at a worse time for investor confidence. Investors are feeling as vulnerable as a hedgehog in the middle of the road."