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Who Put the Hoodoo on Yahoo?

Emily Yoffe
Posted Thursday, March 8, 2001, at 5:29 PM ET

Nasdaq suspended the trading of Yahoo! (YHOO) for most of Wednesday as rumors swirled about the company's troubles. What triggers a halt in the trading of a stock?

Both Nasdaq and the New York Stock Exchange will halt the trading of a stock if the company is about to release news big enough to affect its price. Why? So all investors can get equal access to information before they trade and to reduce panicky spikes in the stock price. The NYSE, which lists about 3,000 stocks, halts the trading of a dozen or so stocks each day. Most halts last about a half-hour. Yahoo!'s lasted so long because the news fueling the rumors--that CEO Timothy Koogle was going to resign--was officially withheld until the close of trading.

The stock exchanges make the call to halt trading, not the affected company. The federal regulators at the Securities and Exchange Commission can also halt trading, although they rarely do. The SEC can order the exchanges to stop trading a stock when it suspects that the company has violated a securities law. In addition to halting trading for news dissemination, the NYSE will halt trading, again to reduce price swings, when it perceives a huge imbalance between the number of buyers and sellers of a stock. (Even so, there is no demand for "Free the Free Market" T-shirts on the exchange floor.)

Also, when the Dow Jones Industrial Average melts down, the NYSE and Nasdaq flip the "circuit breakers" and suspend all trading. After a decent interval, the exchanges reopen.

Bonus Questions:

What does Nasdaq stand for?
National Association of Securities Dealers Automated Quotations.

How old are the Nasdaq and the NYSE?
The Nasdaq was founded in 1971; the NYSE traces its roots to 1792.

Which is bigger, the Nasdaq or the NYSE?
The Nasdaq lists more companies and has a larger volume of trades. The companies on the NYSE are in aggregate worth more than the companies on the Nasdaq.

Doesn't it sound like Mr. Koogle would be happier running Google?
Explainer thinks so.

Next question?

Explainer thanks reader Andrew Shuman for suggesting the question.

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Emily Yoffe is the author of What the Dog Did: Tales From a Formerly Reluctant Dog Owner. You can send your Human Guinea Pig suggestions or comments to .
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