Every once in awhile the NYSE closes early. There can be many reasons for such closures. Some closures are scheduled ahead of time, for example closing early for the holidays. Other closures occur because of technical glitches and other issues.
Holiday closures are very common for the New York Stock Exchange. This year (2015), on both the Black Friday following Thanksgiving and Christmas Eve, the NYSE will close at 1PM, as will the NASDAQ. These closures give traders more time to be with their families, but ensure that investors are able to execute important trades.
Unscheduled Emergency Closures
Unscheduled emergency closures for the New York Stock Exchange are rare but not unheard of. When World War I broke out in July of 1914 the NYSE actually ended up closing down until later in the fall of that year, not fully reopening until mid-December.
Going back even further, when Abraham Lincoln was assassinated in 1865 the NYSE remained closed for an entire week! It seems that authorities were afraid of the impact of a stock crash owing to the loss of the nation’s leader.
Most of the time if the stock exchange unexpectedly closes early, it isn’t because of war or anything quite that dramatic. Instead, it is due to either technical glitches or weather problems.
There is a long history of weather related closures. The first one occurred in 1888 when a massive hurricane hit New York City. The NYSE was forced to close down for two whole days. Talk about a snow storm! More recently, when Hurricane Sandy rolled through the northeast, the NYSE and other exchanges were closed for several days.
Still, with recent advances in technology it’s possible that such closures will become a thing of the past. Traditionally, stock exchanges have relied on floor traders to conduct trades. These days, traders conduct most trades electronically. Floor traders are kept around more for history and nostalgia, rather than actual need. In the future if the NYSE is forced to close the trading floor, the exchange may be able to keep trades flowing electronically.
Besides outright closures, temporary outages are also possible. In July of 2015 the New York Stock Exchange shut down for several hours due to a glitch. At about 3 PM, not too long before markets were scheduled to close, the exchange resumed trading. Interestingly, even though the NYSE was shut down, the exchange of stocks continued through other exchanges.
The increased diversification of stock trading platforms means that even if one exchange is shut down, volume may simply be shifted to another exchange. Of course, one has to wonder if this increased integration could eventually result in a technical glitch or other type of problem spreading from one exchange to the next.
Shift to Computerization and the Risk for More Glitches
Increasingly, stock trading floors are becoming less and less important for traders. Instead of relying on traders physically trading stocks, stock exchanges are now highly automated with computers being able to conduct most trades. This means things like snow storms and other emergency weather situations are becoming less and less important.
The trade off with increased computerization, however, is that the risks of computer and technical glitches could increase. As our dependency on computers and other forms of technology increases, our exposure to glitches in said technologies will increase too.
As a trader it is important for you to keep an eye out for when the NYSE closes early or closes for a holiday. It is difficult to predict when a stock exchange will suspend early due to weather. However, you should be aware that such closures can occur. If you need to execute any vital trades, it’s often a good idea to do so before an exchange closes. This is because conditions could change for the worse if you wait for it to reopen.
Still, you shouldn’t lose sleep worrying if a stock exchange closes early. It rarely signifies anything more than a strong bout of weather or a possible technical glitch. If a closure happens make sure you check the news, look over your portfolio, and draw up a good game plan for when markets reopen.