Wednesday, April 24, 2013
The Tweet that rocked Wall Street: $200 billion lost on fake message
A picture may contain a thousand words, but a single fake tweet can blow a hole in financial markets in seconds.
That was the costly lesson learned on Tuesday as a tweet allegedly from the Associated Press went the global rounds just before 1:08 p.m., reporting two explosions in the White House and that President Barack Obama had been injured.
Within minutes AP personnel swung into damage control, attempted to reassure the tweet was a hoax. But the damage was already done: The bogus message sent the Dow Jones Industrial Average into a tailspin, shaving 150 points, or about 1 percent, in the blink of an eye.
The fake Tweet dealt a hammer blow to other markets as well: The S&P 500, the NASDAQ and crude oil all dropped 1 percent. The S&P 500′s losses alone wiped out about $136.5 billion, according to Reuters; the broader market lost nearly $200 billion in value, USA Today reported. At the same time, the yield on the 10-year US Treasury note fell 4 basis points, and the CBOE Volatility Index – the so-called ‘fear index’ – surged 10 percent.
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