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.
Still, the tweet briefly sparked panic and confusion, and raised questions about the power and influence of social media in global financial markets.
Questions were also raised about how the tweet would impact investors confidence, as many are spooked by the growing number of stock market flash crashes and high frequency trading.
The tweet also raised the urgency for Twitter to improve its verification system.
Of course AP's twitter account isn't the first prominent one to get hacked.
Over the weekend, the Twitter accounts of CBS's (CBS) 60 Minutes and 48 Hours were hacked, and the accounts remain suspended.
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.
The federal government is going to spend money to help those on the East Coast who are hurt by the effects of Hurricane Sandy. That's what governments are supposed to do, assist people in need.
But politicians shouldn't MOREPaul R. La Monica - Oct 30, 2012 12:40 PM ET
Investors are watching the race for the White House like hawks because, when it comes to the fate of the fiscal cliff, there is a lot riding on the Nov. 6 election.
Given all the partisan bickering over how to solve the nation's growing debt, and more immediately, how to avoid the simultaneous onset of tax increases and spending cuts that will be triggered on Jan. 1, the worst possible MOREHibah Yousuf - Oct 5, 2012 7:50 AM ET
|How much could Colin Kaepernick win in his collusion case against the NFL?|
|Qantas airlines takes delivery of first 787-9 Dreamliner from Boeing|
|President Trump's mysterious absence from conservative talk radio|
|Airbus takes majority of embattled Canadian jetliner program|
|Wells Fargo sold dangerous investments it didn't understand, regulators say|