Stocks drop on false tweet of White House explosion
But the market quickly recovers, with the Dow ending up 152 points, after the Associated Press says its twitter account was hacked.
Stocks abruptly plunged when a hacker using the Twitter account of the Associated Press falsely said that two explosions had hit the White House and that President Barack Obama was injured.
The market just as quickly recovered completely when Julie Pace, the AP's White House correspondent. told a briefing in the White House Press Room that the tweet was the result of a hack and was "obviously false." There was no explosion. The President was not injured.
The tweet was live for some four minutes.
The Dow Jones Industrial Average ($INDU) was at 14,699 at about 1:07 p.m., ET, when the tweet was posted. Three minutes later, the blue-chip index dropped more than 145 points and was just above the Monday close of 14,567.17. At 1:10 p.m. ET, the Dow was back to 14,694.
The Dow closed up 152 points to 14,719, just below its high on the day. It was the biggest day for the blue chips since April 16, when the index jumped 157 points. The Standard & Poor's 500 Index ($INX) was up 16 points to 1,579, and the Nasdaq Composite Index ($COMPX) was up 36 points to 3,269. The major indexes are within one percent of their April peaks.
Apple (AAPL), which reports fiscal-second-quarter results after the close, was up $7.46 to $406.13.
The AP said the password to its Twitter account had been hacked after several attempts. AP shut the account down. But the damage was done because computers programmed to buy and sell securities had picked up on the tweet and issued sell orders. A group called the Syrian Electronic Army claimed credit for the hack. Bloomberg BusinessWeek said the group is a pro-Syrian-government activist organization connected to other cyber attacks.
The hack also briefly sent gold (-GC) as much as $5 higher. Crude oil (-CL) in New York fell in response. Both reverted to earlier price levels once the AP clarification came out. Gold settled down $12.40 to $1,408.80 but was moving higher after hours in electronic trading. Crude oil settled at $89.18, down one cent. Brent crude, a key determinant of gasoline prices, was off 23 cents to $100.16.
The incident points up the vulnerability of the networks that manage the nation's financial markets. Markets have been hit by repeated brief plunges caused when computers go haywire on bad information, such as Tuesday's tweet about the White House.
A number of news organizations have had Twitter accounts taken over by hackers. Over the weekend, CBS News said Tuesday that its "60 Minutes" and "48 Hours" Twitter accounts were compromised. Both accounts remain suspended.
A large percentage of stocks and other financial instruments are traded with complex pre-set orders or algorithms to buy or sell. If there's a piece of news that triggers a buy or sell order, it can take a few minutes to correct the problem.
But investors can lose a lot of money in that short time frame. In this case, the fraudulent tweet triggered the selling. Once AP acknowledged the issue, the selling ceased.
The worst was the May 6, 2010, flash crash that saw the Dow fall more than 600 points in about five minutes. The market recovered within a short period, although the Dow ended the day down 348 points. The flash crash is believed to have been set off by a sell order of S&P 500 futures contracts that weren't able to find buyers quickly enough. That generated heavy trading by high-frequency traders.
The market had rallied at the open in part because of a better-than-expected report on new-home sales and in reaction to strong earnings reports from Netflix (NFLX) and ARM Holdings (ARMH).
In addition, there were strong earnings reports on Tuesday across a range of U.S. industries. Makers of handbags, jet planes and chemical products all turned in good results for the first quarter, reviving investors' confidence after a sharp downturn in the stock market last week.
So now we have to worry about the security of some guys twitter password.
I hate that my retirement is any way affected by the middle name of his first pet.
Good thing they got the rumor under control quick or some folks in LA would have set their neighborhood on fire............ again.
And the Market DROPPED".......???
FROM LISTENING TO SOME of YOU INVESTORS...??
I would have thought the DOW would have went through the roof...
Sounds like to me someone needed to make some fast cash, Tweeted a disaster and bought at the lowest asking price, could it be really that easy - I hope not or we are all in a lot trouble coming up.
Obama and the Liberal Dems have done more damage to this Country than all the terrorists combined....wake up America.
We need all Conservative Patriotic Americans to vote in 2014.
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For years, Todd Mills pushed Frito-Lay to make taco shells from Doritos. He died from a brain tumor on Thanksgiving.
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