Robot trading blamed for wild swings in markets

Story from The Takeaway. Listen to audio for full report.

Markets opened lower this morning after stocks plummeted yesterday, when the Dow Jones Industrial Average fell more than 400 points and S&P closed down sharply. This is just the latest in a series of wild swings in financial markets in recent weeks.

What’s causing the severe fluctuations? According to a recent article in the Atlantic, high-frequency trading — or when computers automatically buy or sell stocks — were “largely blamed” for volatility in the markets.

John O’Donoghue, head of equities at Cowen & Company, says computer trading does have an impact on the markets, but there are many other factors that work together to create volatility.

“Markets are actually a reflection of psychology and they are a reflection of either people’s fear or people feeling better,” O’Donoghue said.

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