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Nasdaq Warns of Market Manipulation Amid Coronavirus Outbreak

Zacks Equity Research

Nasdaq, Inc. NDAQ has given a warning regarding potential market manipulation going on during the coronavirus crisis. Spike in volatility and volumes could spur some dishonest traders to take the advantage of this pandemic.

The coronavirus crisis has caused a huge sell-off in the U.S. stock market, where the S&P 500 has lost nearly 30% or more than $8 trillion in value since hitting a record high on Feb 19.

Last week, the Dow dropped more than 17%, its biggest one-week fall since October 2008, when it slid 18.2%. The S&P 500 lost more than 13% last week after dropping 11.5% in the week before. The Nasdaq fell 12.6%. Both the S&P 500 and Nasdaq witnessed their worst weekly performances since the financial crisis in 2008. The 30-stock Dow is now 35.2% below its all-time high level from February, while the S&P 500 is 32.1% below its high.

Two executives of Nasdaq have warned that the rise in number of trading surveillance alerts at financial firms may not be a normal response to the increased market activity. They have to be more cautious about such a rise.
The novel coronavirus has caused a crisis for the world economy and markets. With over 137,000 cases confirmed in countries all over the world, the World Health Organization has declared the virus a pandemic.

In response to the COVID-19 crisis, Nasdaq issued statement on its Nordic and Baltic market operations.

As the exchanges are important for the economy, all Nasdaq Nordic and Baltic equity, fixed income and derivative markets will continue to operate during regular trading hours.

Nasdaq’s employees will continue to operate through a combination of work-from-home, split teams and rotating staff schedules so as to ensure both employee safety and business continuity.

Nasdaq is reviewing its business continuity plans to account for this rapidly evolving situation. It has limited its number of open offices. Events at local European offices have been postponed as a precautionary measure against the novel coronavirus pandemic.

Shares of this Zacks Rank #3 (Hold) stock have lost 5.2% in the past year, compared with the industry’s growth of 0%.


Stocks to Consider

Some better-ranked finance stocks are Intercontinental Exchange Inc. ICE, Cboe Global Markets CBOE and MarketAxess Holdings Inc. MKTX,each carrying a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Intercontinental Exchange and Cboe Global Markets surpassed estimates in the last four quarters, with a positive surprise of 4.28% and 9.49% on average, respectively.

MarketAxess surpassed estimates in three of the last four quarters, the positive surprise being 0.53%, on average.

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