For Robert Strickland, senior vice president and director of investor relations at Wells Fargo & Co., it's normally a good day when shares of the $218 billion-asset banking company are up almost 6%.
But not Thursday. On the NYSE, the stock was actually down 31.25 cents, putting Mr. Strickland in strange position of having to telephone a score of sell-side analysts and inform them that what looked like a rise in stock price was really a mirage.
The discrepancy hinged on which opening price stock watchers were using.
On Wednesday, Wells' stock closed at just above $33. But after-hours trading sent the price down to $31.
So on Thursday, the so-called consolidated price - a composite of a handful of exchanges' quotes - showed the stock up $1.8125, working off a base of $31. Meanwhile the NYSE showed a fall of 1%, working off a base of $33.3125.
That left Mr. Strickland to call up sell-siders to explain the blip before any misguided euphoria sent in. "It has the potential for creating great confusion," Mr. Strickland said. "That's never good in any market during any time period."
While such anomalies do not often crop up, stock specialists are seeing it happen increasingly as after-hours trading gains momentum.
"We are noticing more close-to-close discrepancies," said Bruce Wright, senior vice president of Robb Peck McCooey Specialist Corp., Wells Fargo's specialist on the NYSE. "It's just a fact of life."
The Chicago Stock Exchange has traded stocks after-hours for three years, and it extended them last October to 6:30 p.m., from 4:30 p.m. Trading volume there is on the rise, with 32.7 million shares exchanged in February, up from 30.4 million in January.
Still, Chicago Exchange officials want to see lots more to help stocks like Wells Fargo become much more liquid. More volume would help alleviate such wild swings in the stock price during after-hours trading because it would be easier to match buyers and sellers.
The after-hours snafu "is the absolute epitome of an inefficient market," said Katrina Blecher, an analyst at Brown Brothers Harriman who covers Wells Fargo.
The confusion in Wells' Thursday share price was partly due to a small trade made after hours on Wednesday. A trade of 800 shares was made on the Chicago Stock Exchange at 5:15 p.m., helping drive Wells Fargo's stock down to $31. That was the price used by those who take the last trade from the composite of other stock exchanges across the nation. This consolidated price level is used as a starting point by some, while others strictly follow the NYSE. When after-hours volatility changes a stock price, a case like the Wells Fargo stock crops up.
In the market on Thursday, bank stocks fared well, with the American Banker index of the top 225 U.S. banks rising 2.1%.