False White House explosion tweet roils market

By | April 23, 2013

False White House explosion tweet roils market

A fake tweet from the account of the Associated Press sent stocks tumbling more than 140 points within minutes, erasing all of the day’s gains and then some, before bouncing back just as rapidly.

The erroneous tweet, which was posted around 1:07 p.m. ET, said “BREAKING: Two Explosions in the White House and Barack Obama is injured.” The tweet was up for a few minutes before AP’s account was suspended, and presumably seen by many of AP’s nearly 2 million followers. The tweet was also retweeted by almost 1,500 other Twitter users.

By 1:10 p.m. ET, the Dow was down almost 13 points, or 0.1% on the day. Just prior to the tweet, the blue-chip index had been up about 0.9% for the day. Stocks fully recovered from the plunge a few minutes after hitting the low of the day, as investors realized the tweet had been made by a hacker and was not true.

From its corporate communications account, AP clarified within minutes that the tweet was “bogus” and later elaborate that its account had been hacked and the tweet was fake.

http://buzz.money.cnn.com/2013/04/23/ap-tweet-fake-white-house

Can someone explain exactly why the Dow falls on news like this?

6 thoughts on “False White House explosion tweet roils market

  1. Michael

    People were in shock and stopped trading. When the activity falls, the calculated index follows suit.

    1. arjay001

      Excellent way to make a few bucks if the SEC doesn’t catch you. Were only talking $136 billion dollars give or take. I think the Syrian Electronic Army is claiming credits for the hack. Whatever, people lost money and people made money. Want to venture a guess at who the losers were?

      1. arjay001

        Some have an automatic sell option if the price falls a certain percent. Bad news trigers fear of losses driving the price down. Prices hit the automated sell points and drives the price down more. The MM on wall street go crazy buying up cheap stock. When its all said and done, Joe Blow sold his shares below true market value via an automatic trading option that was designed to protect him. The market is a scary place and a wise (if not jettery) investor would have learned the hard way to sell at least some of his holdings at the first sign of bad news. Lose a little being better then getting wiped out again. The markets remained active during the event.

        “Reports suggest more than $20 billion worth of equity positions changed hands on the New York Stock Exchange during the brief trading hiccup.” (CBC NEWS)

      2. Xeno Post author

        Wow, someone legally robbed billions with a fake twitter post? What a great system we have. To prevent terrorists from profiting by stopping the market by making dramatic news, there should be a “dramatic news metric” that frees the market from this effect. A decline is NOT registered if trading slows due to dramatic news. Surely someone has proposed that?

  2. Michael

    All transactions are electronically recorded. So, the index is a relative measure of trading activity that looks at a list of 30 or so big companies. If there is a lot of trading in those, it’s assumed there is market activity in others as well. When the traders were shocked by the news, they likely just stopped doing their job for a bit and the computers registered a complete halt to trades, so the calculated index fell for that interval. People involved in stock activity who are not right there at the exchange would interpret a drop in the Dow as an economic loss and the speculative value of stocks would be affected as a result. That’s how money is lost. It really is all smoke and mirrors, how much people think something is worth.

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