Schwab, Fidelity resolve temporary disruptions on frenetic trading day

By Niket Nishant and Suzanne McGee

(Reuters) -Charles Schwab and Fidelity Investments have resolved technical issues with their apps, the online brokerages said on Monday, on a day users rushed to trade as markets slumped on rising fears of a U.S. recession.

Some customers struggled to log in to their accounts, the companies had said earlier in the day, without elaborating.

Wall Street's main indexes plunged at the open as weak economic data, drab quarterly earnings from technology behemoths and geopolitical tensions dampened hopes of a soft landing before recouping some of the losses.

The Cboe volatility index, Wall Street's fear gauge, was at a two-year high after hitting its highest since March 2020 earlier in the session.

"What's scaring people more than the fact that the market is selling off is that Fidelity's and Schwab's trading platforms crashed today," said Jason Britton, president and chief investment officer at Reflection Asset Management.

"Those are the things that cause real panic - when people can't see what their portfolios are doing."

Bouts of extreme market volatility can sometimes trigger technical problems, which also raise questions about the capacity of brokerages to handle high volumes.

Such glitches have often drawn the ire of retail investors, who may be looking to "buy the dip" or unwind their positions.

Several users took to social media platform X on Monday to complain of the disruption, with some promising to seek alternatives.

SEC SCRUTINIZING

The Securities and Exchange Commission was tracking the developments, a spokesperson for the regulator told Reuters.

"We are actively monitoring for the orderly functioning of markets," the spokesperson said.

At peak, Schwab was down for nearly 14,500 users while more than 3,600 users reported problems with Fidelity, according to outage tracking website Downdetector.com.

Downdetector tracks outages by collating status reports from several sources including users.

Earlier in the day, Robinhood Markets, the platform of choice for several retail investors, said it had resumed overnight trading after a pause. Vanguard, another popular brokerage, also reported disruption of services.

Rival Interactive Brokers had seen no system-wide outage, said Steve Sanders, its executive vice president of marketing and product development.

"As of 11 a.m. ET, we have executed 5 million trades, and on Friday, we had 5.9 million trades, which was already a busy day," Sanders said.

(Additional reporting by Medha Singh in Bengaluru and Douglas Gillison in Washington; Editing by Sriraj Kalluvila)